Buy Wipro; target Rs 480: Prabhudas Lilladher
Brokerage house Prabhudas Lilladher is bullish on Wipro and has recommended 'Buy' rating on the stock with a price target of Rs 480 in its research report dated July 26, 2013.
August 02, 2013 / 11:45 IST
Prabhudas Lilladher's report on Wipro
"Wipro reported Q1FY14 results ahead of expectation. IT Services (USD) revenue grew by 0.2 percent QoQ (1.2 percent @cc) to USD 1,588m (PLe: USD 1587m, Cons: USD 1,590m). Overall revenue grew by 1.3 percent QoQ to Rs97.29bn (PLe: Rs98.96bn, Cons.: Rs99.4bn). Operating margin expanded by 38bps to 18.1 percent (PLe: 17.9 percent, Cons: 18.1 percent), despite wage hike, onsite shift, visa cost and S&M investment aided by currency depreciation. EPS grew by 3 percent QoQ to Rs6.64 (PLe: Rs6.51, Cons: Rs 6.64).""The management has given IT Services revenue guidance of 2 percent to 3.9 percent QoQ (PLe: 2- 4 percent, Cons.: 1-3 percent) growth in USD terms. The management was very assertive about the improved demand environment, especially in the US. Moreover, the company also highlighted some improvement in the deal pipeline and significant improvement in the sales cycle.""The management has increased its S&M spend by 11 percent QoQ. Moreover, the company has very strong bench strength with Gross Utilization at 64.7 percent, Net Utilization (excl. Trainees) at 73.3 percent. The company has invested in tools which will drive non-linearity. We see room for margin expansion along with improving growth momentum. Revising FY14-15E estimates for revised currency estimates."Valuation & Recommendation: "We see improvement in the win rate to drive the business momentum, along with available margin levers to drive accelerated growth. We see Wipro in an early stage of re-rating cycle. We reiterate "BUY" rating, with a revised TP of Rs 480, 16x (from 15x) FY14E earnings estimate (20 percent discount to TCS)," says Prabhudas Lilladher research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
Read More
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
