November 02, 2016 / 12:21 IST
Prabhudas Lilladher's research report on Wipro Wipro’s Q2FY17 revenues were in line with our expectations; however, margins were 80 bps ahead of our estimates. Q3FY17 guidance is muted and disappointing. After reporting 1% CC revenue growth in Q2FY17, company has guided for 0‐2% QoQ CC revenue growth for Q3FY17, including the benefit from Appirio acquisition. On an organic basis company has guided for negative to flat revenues. Revenue growth trajectory has remained soft for the company. We believe company is realigning its revenue portfolio to cater to the emerging IT spend, through both organic initiatives and acquisitions. These efforts will likely yield results in medium‐term while near term revenue and margins may remain soft.
Despite low revenue growth in FY17, very strong FCF generation by the company with almost 90%+ conversion of Net Profit to FCF and expectations of revival in medium term supports our target P/E multiple of 15x. Retain Accumulate.
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