Hold Wipro; target of Rs 530: Prabhudas Lilladher

Prabhudas Lilladher's research report on Wipro

Wipro reported IT Services revenue of USD2.6bn in Q1FY25, down 1% QoQ in CC terms and 1.2% QoQ in reported terms, below our estimates of 0.5% QoQ decline and below consensus of flattish growth. Although the green shoots in BFSI & Capco continued, the decline in other segments was steeper, which drag the revenue performance. Despite the revenue decline intensity being higher than anticipated, IT Services EBIT margin remained steady at 16.5% (in line with our & consensus estimates), aided by improved utilization and pyramid optimization. The Q2 revenue guidance of -1% to +1%, implies flat QoQ at the mid-range, accounting for ramp-up of the large telecom deal (NN) and anticipated improvement within a few pockets.

Outlook

We estimate revenues/earnings CAGR of 2.2%/6.3% over FY24-FY26E. The stock is currently trading at 23x FY26E. We are assigning P/E of 22x to FY26E with a target price of Rs530. We maintain “HOLD” rating.

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