JM Financial recommended hold rating on Wipro with a target price of Rs 320 in its research report dated July 21, 2018.
JM Financial's research report on Wipro
Wipro (WPRO) reported 1QFY19 that was a tad above the modest expectations; the 0.3-2.3% QoQ USD revenue growth guidance indicates the drag from client-specific issues visible over the last two quarters has subsided. The top client continues to grow (+31% YoY) + deal traction appears to be improving. However, continued uncertainties in HPS + near-term weakness in Utilities and Manufacturing verticals gives little confidence in USD revenue growth converging with peers over FY19-20 even after factoring in the Alight Solutions partnership announced with the 1QFY19 results. On the positive side, WPRO’s differentiated digital portfolio, limited exposure to the US BFS, healthy cash-flows and a prudent capital allocation policy lends downside support.
The stock’s valuation too has moderated vs. peers, post the soft 4QFY18. That said, while an in-line 1QFY19 could give comfort, we believe investors’ engagement may remain low pending a sustained recovery in the revenue growth. Maintain HOLD; our revised PT of INR 320 (INR 300 earlier) is at 14x target PER.
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