Buy Wipro; target of Rs 753: Angel Broking

Angel Broking's report on Wipro

"Wipro’s IT Services segment posted a revenue of US$1,775mn (V/s US$1,804mn expected), a dip of 1.2% qoq, mainly on back of cross currency. On Constant Currency (CC) basis, the company posted a qoq revenue growth of 1.2%, ie the lower end of the guidance of US$1,771-1,806mn, on current currency realization. At the consolidated level, the company posted a revenue of Rs 12,142cr (V/s an expected Rs 11,688cr), a growth of 1.2% qoq. At the consolidated level, Wipro recorded a ~71bp qoq inch up in its EBIT margin to 20.0% V/s an expected 19.5%, led by improved utilization, which moved to 70.5% V/s 68.5% in 3QFY2015. Thus, the PAT came in at Rs 2,272cr (V/s an expected Rs 2,217cr), a qoq growth of 3.6%. Revenues from the IT Services business are expected to be in the range of US$1,765mn to US$1,793mn in 1QFY2016."

"The Management remains confident of the revenue growth pick-up sustaining, citing a pick-up in large deal closures and win rates, uptick in discretionary spending, strong business pipeline and momentum in demand from US sustaining. We expect USD and INR revenue CAGR for IT services to be at 14.6% and 12.0%, respectively, over FY2015-17E. We recommend a Buy rating on the stock with a target price of Rs 753", says Angel Broking research report.

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