Hold Wipro; target of Rs 472: KR Choksey

KR Choksey's research report on Wipro

Wipro reported better-than-expected Q4FY24 results, which beat our profitability estimates, although revenue came in largely in line. Revenue of INR 2,22,083 Mn (flat QoQ), growth driven by America 2 (+1.8% QoQ), sale of IT products (+44.0% QoQ) but this growth was offset by America 1 (- 2.0% QoQ) and APMEA (-1.7% QoQ). EBIT of INR 35,501 Mn rose by 8.9% QoQ and beat our estimates by 5.0%, primarily due to lower-than-expected Subcontracting and technical fees, communications, and other expenses; EBIT margins expanded by 130 bps QoQ. PAT jumped by 5.8% QoQ to INR 28,582 Mn due to better-than-expected operational performance; PAT margins improved by 71 bps QoQ. The attrition rate of 14.2% (same as Q3FY24) came in above our estimate. In Q4FY24 the total bookings stood at USD 3.6 Bn (-14.0% YoY) in CC terms.

Outlook

We apply a reduced multiple of 18.0x on FY26E EPS to reflect top-line weakness and macro environment challenges. We lower our Target Price (TP) to INR 472 per share, with a HOLD rating.