Neutral Wipro; target of Rs 450: Motilal Oswal

Motilal Oswal's research report on Wipro

We see Wipro's aspiration to scale up its BFSI practice as a positive, especially given the potential spend by large banks on technology over the next few years. Moreover, Indian IT companies have historically lagged behind their global peers in terms of consulting capabilities - this is a gap that Capco could bridge for Wipro. However, we see significant risk from this acquisition on account of a) integration risk due to Wipro's weak track record and b) execution risk on challenges related to realizing potential synergies. The execution risk is further aggravated by a weak growth performance from Capco over the last two years - even after adjusting for the drag due to COVID-19.

Outlook

We remain vigilant of the fact that Capco has not grown in revenues over CY18-20 and thus remains a concern even on the topline. We continue to view Wipro as the least preferred name in our large-cap coverage due to its weak growth performance. Maintain Neutral.

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