Hold Wipro; target of Rs 600: Emkay

Emkay Global Financial Services has recommended hold rating on Wipro with a target price of Rs 600, in its research report dated April 21, 2015.

July 31, 2015 / 20:19 IST

Emkay's report on Wipro

Wipro’s revenues at US$ 1,775 mn (-1.2% QoQ and +1.2% QoQ in constant currency terms) missed our expectations (constant currency growth estimates of 2.4%); TCS/HCL Tech reported 1.6%/2.7% QoQ constant currency growth in comparison

IT Services EBIT margins at 22%, up 20 bps sequentially V/s our estimate of 20 bps decline aided by better than expected US$/INR realization at Rs 63.4/$( V/s Rs 63.2/$ in Dec’14 quarter and improvement in utilization rates

Wipro’s June’15 quarter revenue guidance of -0.5 % to +1% QoQ US$ revenue growth remains unexciting as compared to our expectations of 1-3% growth outlook and imply a 4th consecutive year of single digit revenue growth for Wipro in FY16E

"We cut our FY16/17E earnings by ~6/5% each to Rs 38.6/43 respectively. Wipro appears inexpensive compared to peers at ~15/13.5x FY16/17E P/E they need to be weighed in the context of Wipro’s growth gap relative to peers; reiterate HOLD with TP of Rs 600", says Emkay Global Financial Services research report.