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Buy Wipro; target of Rs 670: Emkay Global Financial

Emkay Global Financial is bullish on Wipro has recommended buy rating on the stock with a target price of Rs 670 in its research report dated April 26, 2022.

April 27, 2022 / 02:44 PM IST
 
 
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Emkay Global Financial's report on Wipro


Wipro has agreed to acquire a 100% stake in Rizing Intermediate Holdings Inc. (Rizing), a global SAP consulting firm, for a cash consideration of USD540mn (~2.8x EV/Sales on CY21 sales) from private equity firm One Equity Partners. Deal rationale: The acquisition will enable Wipro to: 1) strengthen its SAP consulting capabilities; 2) leverage Rizing’s long-tenured relationship with SAP, strong GTM, co-run leads and customer referrals to drive revenue growth; 3) enhance its end-to-end capabilities in SAP EAM (SAP Enterprise Asset Management), HCM (Human Capital Management) and SAP for CI (Consumer Industries) through Rizing’s complementary services; 4) strengthen Wipro SAP focus industries of Retail & Consumer Goods, Energy and Utilities; 5) expand its local presence in Australia, Canada, Germany and the US; and 6) expand presence in existing key accounts and access to F2000 clients by bringing deep consulting capabilities. Rizing’s industry expertise and SAP consulting capabilities in enterprise asset management, consumer industries and human experience management will be instrumental in advancing Wipro’s position as a sought-after advisor for clients’ most complex SAP transformations.



Outlook


Given the size of the acquisition (~2% of Wipro’s CY21 revenues), we do not expect any meaningful revision to our earnings estimates. We have a Buy rating on Wipro with a TP of Rs670 (23x Mar’24E EPS).

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first published: Apr 27, 2022 02:44 pm
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