Reduce Wipro; target of Rs 535: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital's research report on Wipro

- Management has indicated steady demand and client specific challenges in the BFSI and Energy verticals. It added 2 large deals in the Energy vertical but see challenges in terms of Capex curtailment by the corporates in view of weak crude prices.

- It has guided flattish to 1% QQ revenue growth for Q1FY16, which is quite contradicting compared to overall positive outlook by the management.

- It is confident on sustained traction in the IMS (transformational engegements) segment as there is a huge opportunity in terms of building/migration to cloud, but over the medium term it would be impacted due to shift of spends from traditional model to cloud.

- Would announce wage hikes in-line with peers effective Jun’15 which would impact OPM furthermore along with the modest volume outlook.

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View: "We continue to maintain our sector underperformer call on Wipro owing to its sustained underperformance in FY15 and discouraging outlook on quarterly revenue guidance, weak employee growth (7% on LTM basis) and miss from its long held aspiration of growing inline with peers/industry which still seems tough target to achieve (TCS/Tech M indicating 14%+ growth). We believe sporadic nature of its growth lacks the confidence of a strong recovery in near term and does not see it getting its growth aligned with peers/industry in FY16 and thus we maintain our underperformer rating given few drivers of growth in its portfolio. We recommend Reduce on the stock with a TP of INR 535 valued at 14x FY17E earnings", says Dolat Capital research report.

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