Sell Wipro; target of Rs 320: Dolat Capital Market

Dolat Capital Market's research report on Wipro

Wipro reported 2.0% QoQ CC revenue growth (DART estm: 1.3% growth) led by demand led broad-based growth across verticals. OPM improved by 20bps QoQ for IT services at 19.2% (DART estm: 18.9%) led by improved utilization (80 bps gain) and continued cost control but negated by Fx impact (60bps). Announced Buyback of Rs.95Bn at Rs.400/share (buying 4.2% equity at 6.6% Premium to CMP). Wipro re-introduced quarterly outlook with a growth guidance of 1.5% to 3.5% QoQ for Q3FY20 (partially led by continued momentum in volumes). Commentary turned positive (demand-led) with a robust pipeline and additional lever of supply side gains for coming quarters. New CEO & MD, Thierry Delaporte shared his strategic roadmap with 5 priorities (Exhibit 7) which shows focus on growth (stable margins) and transforming Wipro to a more client-focus operating structure.

Outlook

Factoring in positive commentary (demand-led), reintroduction of guidance with healthy traction and industry tailwinds provides near term comfort, driving up our revenue estimates by ~2% over FY20-22E and given sustained underperformance we maintain our Sell rating with TP of Rs.320 (valued at 16x FY23E EPS of Rs.20).

For all recommendations report, 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.

Download your money calendar for 2022-23 here and keep your dates with your moneybox, investments, taxes