Wipro share price plunged 6% on Thursday after the company Q3FY22 earnings failed to beat street estimates. Wipro posted a consolidated net profit of Rs 2,969 crore for the December 2021 quarter, almost flat compared to the year-ago period. Wipro’s revenue from operations rose 29.6% to Rs 20,313 crore as compared to Rs 15,670 crore in the same quarter last year. On Thursday, Wipro’s share price fell over 6% to Rs 648 per share. Wipro board approved interim dividend of Re 1 per equity share of par value Rs 2 each to the Members of the Company. 24 January has been fixed as the Record Date, and payment of Interim Dividend will be made on or before 5 February, Wipro said.
IDBI Capital: HOLD
Target Price: Rs 780
Wipro’s Q3FY22 IT services revenue growth of 3.0% in cc terms was in mid of guided range, and the IT services margins were below IDBI Capital’s expectation. However, the brokerage firm believes that this is quarterly aberration. The new CEO’s strategy to keep global executives for delivery and hiring leaders to drive growth is seeming effective, it said. “This coupled with robust industry tailwinds, large deal TCV of US$600 million, robust organic growth, 27% YoY growth in order book and turnaround under new CEO prompts us to be positive on the stock. However, recent run up in price factors in most of the positives. Hence we downgrade the stock from BUY to HOLD with our target price of Rs 780”.
Parbhudas Liladher: BUY
Target price: Rs 737
Prabhudas Liladher cut Wipro’s revenue estimates by 1.5% for FY23/24E led by miss in revenue in Q3FY22. Its estimates remained intact on account of resilient margin performance of the IT major. Analysts highlighted that Wipro management mentioned how quarterly attrition has stabilized in Q3 and expect it to moderate in coming quarters. “There is scope for margin expansion in next financial year with attrition related cost pressures subsiding, pyramid optimization benefits coming in and revenue growth leverage. We arrive at DCF based Target Price of Rs 737.” The brokerage maintained a ‘Buy’ rating on the stock saying any sharp sell-off in the stock should be looked upon constructively.
Kotak Securities: REDUCE
Target price: Rs 665
Wipro’s Q3FY22 quarter revenue of 3% QoQ in c/c was lower than Kotak Securities’ estimate. The company has made solid progress and will achieve organic revenue growth of 15.1% in FY2022E, it said. The brokerage maintained its revenue and EPS estimates saying Wipro has made good progress in the turnaround journey with smart changes to the organization structure, improving leadership profile and bench strength, and increase in emphasis on large deals. “These improvements show up with increase in organic revenue growth rate to 15.1% on yoy comparison in FY2022E. However the turnaround journey has bumps along the way; a weak December quarter is a good example of the same. Stock at 25X FY2024E EPS does not offer any margin of safety. We maintain our ‘REDUCE’ rating valuing the stock at an unchanged 24X FY2024E EPS. Fair value increases to Rs 665 from Rs 625 earlier on roll-over,” it said.
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