Wipro Share Price Live: The stock hit its circuit limit at Rs 511.95 on BSE. The IT scrip is up 15 per cent in the last one month. This is against a 7 per cent rise for HCL Tech, 5 per cent for Infosys and 2 per cent for TCS.
Given that Wipro Ltd.’s American Depository Receipts (ADRs) were up 17% on Friday, investors shouldn’t be shocked by Monday morning’s 13% stock gain at domestic exchanges. Analysts noted that, of the four IT majors, Wipro is the only one whose December quarter results showed signs of improvement in discretionary spending. But before becoming overly optimistic about the counter, analysts want to see more.
The stock increased by 13.10 percent on Monday, reaching a peak of Rs 511.95 on the BSE. As a result, the IT subscription has increased by 15% in the past month. In contrast, Tata Consultancy Services Ltd. saw a rise of 2%, Infosys Ltd. of 5%, and HCL Technologies Ltd. of 7%.
“Wipro’s Q3 results point to a shift. The first revenue degrowth in the previous four quarters occurred towards the upper end of the guided band. After three quarters of successively lower bands, the guidance for the upcoming quarter is gradually better. Its consulting division, CAPCO, experienced double-digit booking growth. We think that is the first quantitative indication of a recovery in discretionary spending. Wipro’s recent performance has been hindered by CAPCO’s exposure to discretionary budget. Now as environment turns, that could lead its rebound,” said JM Financial in a note.
Wipro has underperformed in execution, according to Axis Securities, despite achieving better outcomes and closing more deals. It added, though, that FY25 might see some recovery supported by significant deal wins. It suggested giving the stock a “Sell” rating because it lacked the required visibility.
Wipro’s trajectory is “recovering,” according to HDFC Institutional Equities, following a 6% decline in the quarterly revenue rate over the previous three quarters. Even though the commentary on the consulting business has improved, Wipro’s growth indicators—such as the loss of deal market share to competitors, the general decline in verticals, and the sharp decline in T5 accounts—remain concerning.
Driving growth from its partner ecosystem has been Wipro’s primary focus. The company is also working to improve its operating profile based on modifications to its operating structure, including portfolio focus in APMEA, absorbing growth office functions within Strategic Market Units, developing a delivery cadre, and placing a stronger emphasis on training and development. Maintain REDUCE on Wipro with a target price of Rs 450, based on 17 times FY26E, according to the brokerage.
Wipro recorded a 1.7% sequential decline in constant currency (CC) revenue for the quarter. This was in the range of minus 3.5% to minus 1.5%, which was the upper end of their guidance. Analyst estimates of a 2-4% degrowth in sales were surpassed by Wipro’s degrowth.
“This performance has come about despite some low-margin client rationalisation in APMEA (impact not quantified). Compared to Street’s worst fears, which were for a “wider and deeper” furlough quarter, the performance has been much better. The sharp ADR performance (up 18 per cent on 12th January 2024) is likely because of positioning,” said Nirmal Bang Institutional Equities.
Kotak Institutional Equities noted the management’s positive comments and noted that strict cost control allowed for a 50 basis point margin beat.
“A rapid recovery in demand is not reflected in the YoY decline in TCV or the guidance of a revenue decline at the midpoint for 4QFY24. Estimates for EPS are essentially unchanged. Maintain the Rs 430 fair value and REDUCE,” it stated.
According to Motilal Oswal, Wipro should have one of the lowest revenue growth rates among tier-1 IT services providers in FY24. Furthermore, it shows that Wipro’s margin is less than the management’s 17–17.5 percent medium-term guided range.This broking form kept its “Neutral” position on the stock, waiting to become more constructive on the stock until it sees more proof of Wipro’s updated strategy being implemented and a successful recovery from its past ten years of difficulties. For the stock, Motilal Oswal has set a target price of Rs 520.
“We do see signs of gradual improvements, but Wipro’s muted Q3FY24 performance and Q4FY24 guidance leave much to be desired. For FY24, Wipro is expected to report a YoY decline in top line that is much lower than peers. We still expect Wipro to perform below peers, mostly because of the company’s poor relationship between deal wins and top line growth, which is made worse by the company’s ongoing departures. The downside potential of the stock is limited by its cheap valuation and high dividend yield, according to Nuvama Institutional Equities. For the Wipro stock, this brokerage recommended a target price of Rs 460.
