Hold Wipro; target of Rs 610: Emkay

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26 Aug, 2025 12:21

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Emkay's research report on WiproWipro reported a 2.1% QoQ US$ revenue growth to US$ 1,832 mn (+3.1% QoQ in constant currency terms) with IT Services EBIT margins declining by ~30 bps QoQ to 20.7%, broadly in-line with our estimates Dec’15 quarter revenue guidance of 0.5-2.5% QoQ US$ revenue growth is disappointing and is putting to risk the historical trend of a relatively stronger H2 for Wipro. Wipro highlights extended furloughs and longer deal transition time apart from the Dec seasonality effect. Amongst Geographies, US continues to lead as growth from Europe continues to struggle (+1.1% YoY in constant currency terms) unlike peers who are doing relatively better in Europe. Client metrics and top clients performance beginning to reflect Wipro’s inherent struggles on client mining Moderate FY16/17/18E EPS by 2/4/2% respectively on lower revenue/margin assumptions. Valuations appear inexpensive at ~<14/13x FY17/18E P/E but need to be seen in context of Wipro’s unending struggle to catch up worth peers on growth. HOLD stays, TP Rs 610 (V/s Rs 630 earlier)We moderate our FY16/17/18E EPS by 2/4/2% each as we cut our US$ revenue growth expectations (4.9%/9.5% V/s 5.8%/9.9% earlier for FY16/17). While valuations at <14x/13x are inexpensive and limit any sharp downsides, they are fair in our view given Wipro’s unending stretch of failing to catch up with peers on growth. (FY16 to mark the 4th yr in a row of single digit growth). We see potential risk to Wipro’s historically strong revenue performance in H2.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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