Buy Wipro; target of Rs 680: ICICI Direct

ICICI Direct's report on WiproIT services constant currency (CC) revenues grew 3.1% QoQ (1.5 to 3.5% guidance) while dollar revenues grew 2.1% QoQ to $1,831.9 million (2% QoQ, $1,830 million estimate)IT services EBIT margins declined 25 bps QoQ to 20.7%, in line with our estimate Reported PAT of Rs 2,235 crore was modestly above our Rs 2,160 crore estimate led by higher other incomeWipro gave Q3FY16E revenue growth guidance of $1,841 million to $1,878 million (0.5 to 2.5% QoQ growth) Modest valuations continue to dictate BUYWe estimate Wipro will report slower revenue and PAT CAGR of 8% and 7% during FY15-17E (average 21.8% IT services EBIT margins in FY16- 17E), vs. 12%, 14%, reported in FY10-15 (average 22.1% margins), respectively, led by weak client mining and softness in energy vertical (~15% of revenues). We continue to value the stock at 16.8x FY17E EPS of Rs 40.5 to arrive at our Rs 680 target price and maintain our BUY rating, says ICICI Direct research report.For all recommendations, click hereDisclaimer: 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.

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