Credit Suisse retains outperform on Wipro, says growth key

Moneycontrol Bureau

Credit Suisse maintains an outperform rating on Wipro citing that significant pickup in growth may also result in re-rating.

The brokerage likes the stock for its valuations which is lowest among peer group. Credit Suisse says that management looks confident on the outlook and expects increased focus on client mining and its focus on execution to accelerate growth. Despite short-term headwinds in the energy vertical, management is optimistic on medium-term opportunities. It also sees an upside bias in the margins in the medium term.

Wipro had held its analyst day at its Bengaluru campus. Besides presentations on its strategy, demand environment, infrastructure management and the India/Middle-East business, it showcased its focus on execution and its capabilities in next-gen technologies.

“While management outlook has been reasonably confident for a while but has not translated into any significant pickups in growth yet, we note that there has been a small acceleration in recent quarters and any significant pickup can also result in rerating,” it says in a note.

In third quarter of FY15, Wipro’s profit (from IT services and products business) jumped 5 percent sequentially to Rs 2,203.1 crore. Constant currency IT services revenue in dollar terms grew 3.7 percent sequentially (up 9.7 percent year-on-year) to USD 1.84 billion, which was within the company's guidance range of USD 1.81-1.84 billion. This was much higher compared to its peers Infosys (2.6 percent) and TCS (2.5 percent).

At 09:46 hrs Wipro was quoting at Rs 650.40, down Rs 3.85, or 0.59 percent on the BSE.