Reduce Wipro; target of Rs 289: KR Choksey

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26 Aug, 2025 12:21

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Revenue for Q3FY25 stood at INR 223,188 Mn, up 0.5% YoY (+0.1% QoQ), in line with our projections. EBIT grew to INR 38,633 Mn, up 18.2% YoY (+5.2% QoQ), exceeding our expectations. EBIT margin stood at 17.3% (+up 260bps YoY/ +84bps QoQ). PAT grew to INR 33,538 Mn, up 24.5% YoY (+4.5% QoQ); PAT margin expanded 289bps YoY (+64bps QoQ) to 15.0%. Wipro delivered a strong Q3FY25 performance, exceeding expectations with a robust USD 3.5 Bn in Total Contract Value (TCV). Growth was driven by the Americas, particularly in the Health and BFSI verticals, while Europe and APMEA faced macroeconomic pressures. Wipro recorded its highest-ever EBIT margin, supported by operational efficiencies and cost reductions. In light of improved OPM margin and strong deal wins, we increase our FY26E/FY27E EPS estimates by 4.8%/4.9% to INR 13.3/14.5, resulting in a target price of INR 289 per share (previously: INR 266) based on a P/E multiple of 20.0x for FY27E.

However, despite the positive operational results, we remain cautious due to Wipro’s elevated valuations, ongoing structural challenges in over a third of its portfolio, and underperformance relative to Tier-1 IT peers. A more definitive recovery is needed for sustained growth. As a result, we maintain a "REDUCE" rating.

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