Wipro's Q2 FY25 earnings have drawn mixed reactions from brokerages. While strong deal momentum and solid margin performance provided optimism, muted revenue growth and weak near-term guidance weighed on investor sentiment.
On October 17, Wipro's shares ended 0.7 percent lower at Rs 528.70. Although the stock has gained over 10 percent year-to-date, it still lags behind the Nifty 50's 13 percent rise in the same period.
Morgan Stanley and Jefferies have projected a downside of 5.3 percent and 12 percent for Wipro shares, while Nomura and Macquarie expect an upside of 28.8 percent and 26.8 percent, respectively.
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Morgan Stanley, which holds an 'underweight' rating with a target price of Rs 500, expects Wipro to continue underperforming due to its sluggish revenue growth compared to peers, with limited chances of near-term improvement.
Wipro's consolidated net profit for Q2 FY25 rose by nearly 7 percent quarter-on-quarter to Rs 3,209 crore, surpassing Moneycontrol's estimate of Rs 3,011 crore. Revenue from operations increased by 1.5 percent QoQ to Rs 22,302 crore, beating Moneycontrol's forecast of Rs 22,219 crore.
Jefferies also remained cautious, maintaining an 'underperform' call with a target of Rs 465, citing disappointing Q3 guidance and broad-based revenue pressures.
For the December quarter, Wipro expects IT Services revenue to range between $2,607 million and $2,660 million, implying a sequential guidance of (-)2.0 percent to 0.0 percent in constant currency terms. This marks a downward revision from the September quarter's forecast, which allowed for a revenue change of up to 1 percent in either direction.
Also Read | Wipro ADR slides 4% post Q2 results on lower guidance for December quarter
"Our Q3 (FY25) revenue is expected to be affected by seasonal furloughs and fewer working days in this quarter," Srinivas Pallia, Chief Executive Officer of Wipro, said in the post-earnings conference call.
On a more bullish note, Nomura had a 'buy' call on Wipro with a target of Rs 680, highlighting strong large deal wins and early signs of a discretionary demand recovery. Nomura praised Wipro's margin execution, noting its ability to sustain performance despite slower growth.
In Q2FY25, Wipro's total bookings rose to $3.56 billion, up from $3.23 billion in Q1 and large deal bookings also rose to $1.49 billion from $1.15 billion.
Operating margins for the quarter improved by 30 basis points to 16.8 percent, exceeding Moneycontrol's estimate of 16.4 percent.
Meanwhile, Macquarie held an 'outperform' call on Wipro with a target of Rs 670, highlighting Wipro's earnings beat.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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