Hold Wipro; target of Rs 530: Sharekhan

Sharekhan recommended Hold rating on Wipro with a target price of Rs 530 in its research report dated January 12, 2024.

Broker Research

January 15, 2024 / 14:10 IST

Hold

Sharekhan's research report on Wipro

Wipro’s Q3FY24 revenue stood at $2,656.6 million, down 1.7% q-o-q in CC but above our estimate of 2.5% q-o-q decline in CC owing to weakness in Communications, Manufacturing, Technology, Consumer, and BFSI verticals partially offset by growth in HealthCare and Energy & Utilities. IT services margin declined 10bps q-o-q to 16%, beating our estimates of 15.4% despite wage hikes and furloughs. Total bookings stood at $3.8 billion while large deal TCV stood at $0.9 billion, down 8.3% y-o-y in CC. The company provided revenue growth guidance for IT services in the range of -1.5 to 0.5% in constant currency for Q4FY24 implying anticipation of improving demand environment.

Outlook

In line with our sector upgrade, we have raised the target multiple for Wipro to factor in receding macro headwinds and better earnings visibility for FY25. However, we believe Wipro’s earnings growth momentum would lag its Tier 1 peers. Hence, we maintain Hold on Wipro with revised price target (PT) of Rs. 530. At CMP, the stock trades at 20.5/17.7x its FY25/26E EPS.

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