Neutral Wipro; target of Rs 500: Motilal Oswal

Motilal Oswal's research report on Wipro

Wipro (WPRO) reported 2QFY25 IT Services revenue of USD2.6b (0.6% QoQ) in constant currency (CC), 60bp above our estimate. It posted an order intake of USD3.6b (+9.6% QoQ), with a large deal TCV of USD1.5b (+30% QoQ). EBIT margin of IT Services was 16.8% (est. 16.0%). EBITDA rose 2.7% QoQ/7.8% YoY to INR46b (est. INR44b). PAT stood at INR32b (+6.8% QoQ/+21.3% YoY), above our est. of INR29b. For 1HFY25, revenue declined 2.3%, whereas EBIT/PAT grew 7.9%/12.8% compared to 1HFY24. WPRO’s has provided muted guidance for 3QFY25, as it expects USD CC revenue performance in the range of -2.0% to 0.0% QoQ.

Outlook

We have raised our FY25E EPS by ~2% to factor in the margin beat and kept FY26E/FY27E EPS broadly unchanged after its 2Q print. We reiterate our Neutral rating as we view the current valuation as fair. Our TP of INR500 implies 20x Sep’26E EPS.