Neutral Wipro; target of Rs 710: Motilal Oswal

Motilal Oswal's research report on Wipro

We attended WPRO's Investor Day. The management commentary continues to point towards sustained growth momentum, with stable margin. The management indicated a strong and broad based demand environment. All industry verticals are witnessing good demand. Within geographies, its earlier growth driver - the US - continues to grow, while Europe (particularly continental Europe) has witnessed strong acceleration. WPRO aspires to be the orchestrator of choice for customers on Cloud deals, allowing it to partner both with clients and Hyperscalers. It reiterated its plan to invest USD1b in building its Fullstride Cloud service and plans to continue to invest in other high growth areas. Investment in the sales channels via: 1) lateral leadership hires (80% in market facing roles), 2) a large deals team, and 3) strategic partnerships, are expected to power growth. The acquisition of Capco has proved to be successful, with 22 joint go to market deal wins for WPRO. It has been able to open large opportunities with clients, where it was unable to fulfill the requirements earlier, and has seen an increase in wallet share at large BFSI clients.

Outlook

We maintain our Neutral stance as a successful turnaround from its growth is aptly priced into our estimates and valuation. Our TP implies 28x FY23E EPS.

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