Hold Wipro: target of Rs 740: Sharekhan

Sharekhan's research report on Wipro

Wipro is confident of strong revenue growth in FY2022, aided by solid deal intake, a healthy deal pipeline and strong staff additions. Synergies from the Capco acquisition will help Wipro capture opportunities in the BFS space. We expect sub-contracting expenses to inch up in the coming quarters, owing to strong demand, rising attrition and lower hiring of freshers. Margins would stay stressed in the subsequent quarters owing to wage hikes for mid- and junior staff (effective September 2021), full-quarter impact of salary revision for senior staff, impact from full-quarter consolidation and investments in building capabilities.

Outlook

We downgrade our rating on Wipro to Hold from Buy with a revised PT of Rs. 740, owing to expected margin pressure and an unfavourable risk-reward ratio.

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