Emkay Global Financial recommended hold rating on Wipro with a target price of Rs 210 in its research report dated May 31, 2020.
Emkay Global Financial's report on Wipro
Wipro last week announced the appointment of Thierry Delaporte as CEO, succeeding Abid Neemuchiwala, who resigned earlier this year. This removes the event overhang on the stock. Delaporte is a Capgemini veteran having spent nearly 25 years at the company, with stints across finance, operations and sales. Given his strong experience, Wipro looks to improve business in Continental Europe (where it has failed to benefit from increased offshorization unlike peers) and Financial Services. New CEO takes charge in the time of recession and will have his task cut out given Wipro’s long-standing struggles around client relevance, differentiation and strategy. Street has been enthused with CEO changes in the past (2011 and 2016), hoping for turnaround and improvement in Wipro’s fortunes but has been disappointed as Wipro’s underperformance has continued.
Valuations remain cheap at ~8% FCF yield that prompted us to upgrade the stock to Hold in Mar’20. Our order of preference in Tier I techs remains unchanged with HCLT > TechM (both Buy) > Infosys > Wipro (both Hold) > TCS (Sell).
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