Wipro share price fell around 2% intraday on Thursday after company’s Q1 results failed to beat Street estimates. Wipro stock ended at Rs 414.10 apiece, up 0.5 per cent on BSE. The information technology (IT) giant reported a 20.94% on-year decline in its consolidated net profit at Rs 2,563.6 crore for the quarter ended June 2022, down from Rs 3,242.6 crore reported in the same quarter last fiscal. On a sequential basis, the profit fell 16.96 per cent. The consolidated total revenue for Wipro, however, rose 15.51% on-year to Rs 22,001 crore. Wipro shares fell to an intraday low of Rs 409 on NSE, down around 2% from previous close. So far this year, Wipro stock has plunged 43%. Brokerages’ views remain mixed in the IT stock with some seeing up to 106% upside, other seeing downside of 5%.
Should you buy, hold or sell Wipro shares?
Target price: Rs 851; Upside: 106%
According to analysts at Edelweiss Securities, Wipro has delivered strong bookings and its pipeline continues to be solid. Wipro’s believes margins have bottomed out and that it would improve margins using levers such as utilisation, sub-contracting costs and pyramid-broadening. The brokerage cut FY23E/FY24E EPS by 4.5%/4.7% and rolled over the valuation to Q3FY24E while maintaining a ‘buy’ call on the stock with a target price of Rs 851 (30x Q3FY24E).
Target price: Rs 460; Upside: 11.6%
Though the company’s turnaround journey has been progressing well in certain pockets, supply side pressures and higher exposure to discretionary spending after recent acquisitions (CAPCO, Rizing, among others) would affect earnings growth amid an economic slowdown, according to analysts at Sharekhan. “We expect Wipro to report USD revenue/earnings CAGR of 10 percent/5 percent over FY2022-FY2024E. At CMP, the stock trades at an expensive valuation of 19x/17x its FY2023/FY2024 earnings estimates. We believe the company has limited margin levers to offset headwinds in next couple of quarter,” they said. The brokerage maintains a ‘hold’ rating on Wipro with a price target of Rs 460.
Motilal Oswal: Neutral
Target price: Rs 390; Downside: 5%
According to Motilal Oswal Financial Services, though Wipro had a strong 1QFY23, with strong bookings and pipeline, it expects its FY23 organic growth to be one of the lowest in Tier I IT Services, along with margin below the medium-term guided range of 17-17.5%. The brokerage lowered its FY23/FY24 EPS by 7%/6% to factor in the margin miss. “We maintain our Neutral stance as we await: a) further evidence of the execution of WPRO’s refreshed strategy, and b) a successful turnaround from its growth struggles over the last decade before turning more constructive on the stock,” they said. Analysts maintain “Neutral’ rating on the stock with a target price of Rs 390 per share, implying 5% downside.
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