What should investors do with Wipro post Q3 earnings: buy, sell or hold?

Also Read - Wipro Q3 profit rises 21% YoY, dollar revenue growth highest in 36 quarters; announces interim dividend

Sharekhan

The broking firm revised earnings estimates for FY2021E/FY2022E/FY2023E factoring in better-than-expected Q3 FY2021 results and strong deal wins. It believes that a leaner organisation structure would enable the company to take better decisions on a go-to market strategy and optimise costs.

Wipro would focus on mining large accounts, wining large transformational deals, hiring top talents for key roles, leveraging partnerships and strategic mergers & acquisitions (M&A) to drive faster growth.

At CMP, the stock is trading at 22x/21x of its FY2022/FY2023 earnings estimates, at a significant discount to its large peers. Given the company’s keen focus on growth acceleration with stable margins, it maintained its buy rating on Wipro with a revised price target of Rs 510.

Dolat Capital

Given strong Q3 performance, but inline growth Guidance, Dolat Capital upgraded its top-line (IT Services in USD terms) estimates by 0.2% / 1.3% / 0.2% for FY21/FY22/FY23. Also, given its robust OPM performance in Q3 but upcoming planned re-investments and impending wage hikes it has increased margin estimates by 114bps/128bps/66bps for FY21/FY22/FY23E respectively.

It believes the company, and other Tier I IT companies, would continue to deliver strong revenue momentum over next 5-6 quarters (translating into double digit revenue growth) and thus would sustain current valuations of 20x-25x which implies 2x to 3x on PEG basis. It currently values Wipro at 19x (from 18times) on FY23E earnings of Rs 20.8 (earlier Rs. 20.1) with target price of Rs 390 per share (from Rs 360) and unchanged rating of sell.

Motilal Oswal

In the past few years, Wipro has underperformed Tier-I companies on growth, partly due to its higher exposure to challenged verticals (such as Healthcare and ENU). Additionally, changes at the company level (restructuring in India / the Middle East) have further constrained growth. However, we expect that the refreshed strategy of the new management to make the organization leaner and adopt a growth-focused approach would turn fruitful over the medium-to-long term.

We upgrade our FY21/FY22/23E EPS by 10%/15%/16%, largely led by a revised revenue outlook based on the guidance. Maintain Neutral – as we await a) further evidence of the execution of Wipro’s refreshed strategy and b) successful turnaround from its growth struggles over the last decade before turning more constructive on the stock. Our target price implies 19x FY23E EPS.

Credit Suisse

The research house maintained a neutral rating and raised the target to Rs 500 from Rs 370. The company's Q3 earnings beat estimates.

Credit Suisse increased FY21E EPS by 7% & FY22-23e EPS by 9-12%, while higher or lower-than-expected growth & sharp forex movement are the key risks, reported CNBC-TV18.

Edelweiss

It was strong a Q3 as margin turns out to be biggest positive surprise, up 240 bps QoQ. It believes the strategy execution by new CEO is now beginning to bear fruit. Edelweiss maintained its buy call and raised the target to Rs 550 from Rs 467, reported CNBC-TV18.

Morgan Stanley

Morgan Stanley kept underweight on the stock and raised the target to Rs 410. It raised FY21-F23 EPS by 5-6% on the back of a strong Q3 & improved demand environment, reported CNBC-TV18.

Jefferies

Research house kept an underperform rating with a target of Rs 400. While revenue was slightly ahead, sharp margin expansion was the key surprise. It raised estimates by up to 14%, reported CNBC-TV18.

At 09:23 hrs, Wipro was quoting at Rs 445.60, down Rs 13.40, or 2.92 percent on the BSE.

The share touched its 52-week high Rs 467.20 and 52-week low Rs 159.60 on 13 January, 2021 and 19 March, 2020, respectively.

Currently, it is trading 4.62 percent below its 52-week high and 179.2 percent above its 52-week low.