BSE IT index climbs to record high as Wipro surges the most in 16 years

July 16, 2020 1:30 AM

While the BSE IT Index surged 5% or 770.14 points to close at a record-high of 16,511.48 points on Wednesday, the Sensex ended flat at 36,051.81 points, up 0.05%.

While the shares of Tata Consultancy Services (TCS) gained 2.9%, HCL Technologies and Tech Mahindra gained 4.1% and 2.8% respectively.While the shares of Tata Consultancy Services (TCS) gained 2.9%, HCL Technologies and Tech Mahindra gained 4.1% and 2.8% respectively.

By Yoosef KP

Technology stocks were on a roll on Wednesday. The BSE IT index rose to a fresh all-time high, powered by record surge in shares of Wipro, which rallied as much as 16.8% on Wednesday — the most since May 2004 — after analysts revised the target prices on improved operating margin in Q1FY21. The earnings before interest and tax (ebit) margin expanded by 146 basis points (bps), sequentially, to 19.1%, aided by lower travel expenses, reduced wage bills, leveraged automation and curb on other spends.

While the BSE IT Index surged 5% or 770.14 points to close at a record-high of 16,511.48 points on Wednesday, the Sensex ended flat at 36,051.81 points, up 0.05%.Shares of the second-largest IT firm, Infosys, soared to a 52-week high on Wednesday before announcing its quarterly numbers. Later the day, the company reported better-than expected earnings for the quarter ended June. The Infosys stock has added 13.6% so far in 2020 against the Sensex fall of 12.6%. While the shares of Tata Consultancy Services (TCS) gained 2.9%, HCL Technologies and Tech Mahindra gained 4.1% and 2.8% respectively.

Kotak Institutional Equities, which upgraded the stock to “add” on inexpensive valuations, observed that the stock was trading at 12 times of FY2022E earnings, implying negligible 2% growth to perpetuity, which was a tad pessimistic. “Our upgrade is not predicated on Wipro reaching industry matching growth but based on modest mid-single digit revenue growth,” the domestic brokerage said in an investor note.

Wipro also announced a couple of large deals in the quarter and showed moderate improvement in large deal win. Wednesday’s surge in Wipro’s shares have added Rs 21,658 crore to its market value. At the close, the market capitalisation of Wipro stood at Rs 1.50 lakh crore.

Citigroup is of the view that, “Wipro is managing costs well and delivering solid cash flows even as it continues to lag peers on growth.” The foreign brokerage also raised EPS estimate 3-6% for FY21-FY23 on cost benefits and revised target multiple to 14 times from 13 times.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1U.S. Stocks: Wall Street slips as monthly private payrolls disappoint
2QIP mechanism: Sebi proposes discontinuing segregated offering of NCD, warrants
3Sugar output jumps over two-fold at 42.9 lakh ton in October-November