Hold Wipro: target of Rs 750: Sharekhan

Sharekhan's research report on Wipro

Q2 revenue growth handily beat guidance; margins surprised positively despite wage revisions, impact of acquisitions and investments in capability-building. Net staff additions and utilisation stayed strong, while attrition inched up. Management guided for revenue growth of 2-4% q-o-q for Q3FY2022, as we expected, led by broad-based demand and a strong deal pipeline. Deal TCVs grew 19% y-o-y in H1FY2022, while Cloud pipeline crossed $8 billion. Though Wipro is progressing well in its turnaround journey, we believe a valuation of 27x FY2023E factors in growth potential. USD revenue growth likely to clock CAGR of 15.3% over FY2021-FY2024E.

Outlook

We maintain a Hold on Wipro with a revised PT of Rs. 750, owing to expected pressure on margins in H2FY2022 and an unfavourable risk-reward ratio.

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