Hold Wipro: Ventura

Ventura has recommended hold rating on Wipro, in its January 21, 2013 research report.
 
“Wipro, management expects 1.8% growth in Q4FY13 on QoQ basis supported by healthier deal pipeline and discretionary spend environment. However, we remain apprehensive about the growth in the H1FY14 and expect growth to be more back-ended led by sluggish growth in RTB. Nevertheless recent deal wins in the new technology areas like mobility, cloud and enterprise look encouraging. Further, the significant traction in Energy & Utility illustrates that acquisition of SAIC is panning out well. At the CMP of Rs 397 the stock is available at 13.8x and 12.3X FY14E and FY15E and we maintain hold rating on the stock.”
 
“Wipro recorded a growth of 3.8% qoq in its revenue to Rs 10,989 crore on the account of customer focused approach, execution, investments in new technology and strong management skills. IT services revenues were higher by 2.3% (QoQ basis) at US$ 1,577mn fueled by increasing realization by 3.4% sequentially (onsite 3.6% QoQ and offshore 3.4% QoQ). Europe markets grew by 7.5%, followed by APAC and other emerging market (3.4%); while, US market degrew marginally by 0.7% on a QoQ basis. Vertical wise Energy and utilities, Finance Solutions and retail and transportation grew by 2.4%, 2.0% and 3.1% respectively on QoQ basis. On the other hand, healthcare, life sciences and services and global media and telecom, have shown a growth of 7.1% and 1.3% respectively.”
 
“The company added 50 new clients in Q3FY13 and signed 6 multiyear multi-million USD deals. Its >$100mn contributing clients increased from 1 to 10 in last 8 quarters, increasing its $50-$100mn client conversion rate to 38%, one of the highest in the industry signifying its superior client mining capability. The management expects IT services to post a revenue growth of 0.5% ($1,585mn) to 3% ($1,625mn) for Q4FY13. Deal pipeline for the company has grown 70% YoY and large deals (>$100mn) have grown by 100% YoY hinting FY14E to be a better year for the company vis-a-vis FY13E,” says Ventura research report.

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