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Wipro to deliver sub-par growth and lag peers, say brokerages

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MUMBAI: Indias third largest information technology company Wipro is likely to continue to underperform peers in terms of growth given its persistent execution challenges and gloomy outlook, said brokerages following its March quarter result.

The company reported a consolidated net profit of Rs 2,483 crore, up 37.74 per cent year-on-year. Consolidated revenue rose 9 per cent to Rs 15,006.30 crore. The company also announced a Rs 10,500-crore share buyback. The company said IT services revenue for the first quarter seen in the range of $2,046-2,087 million, which translates into a sequential growth of -1 per cent to 1 per cent.

Ahead of the result announcement post India market hours on Tuesday, Wipro ended down 2.4 per cent at Rs 281.1 on BSE while its American Depositary Receipts fell 3.4 per cent later that day, signalling a weak opening for the stock when market resumes trade on Thursday. Indian markets were shut on Wednesday on account of Mahavir Jayanti.

“Weak Q1FY20 (April-June 2019) guidance when industry growth is accelerating and despite strong deal wins highlights Wipros persistent execution challenges. We expect it to remain at the bottom of the peer growth range in FY20,” said CLSA, retaining sell rating with target price of Rs 220.

Edelweiss, Prabhudas Lilladher and Reliance Securities have retained hold rating while Nomura and Motilal Oswal have a neutral rating on Wipro. The consensus ratings are divided as 22 of the 49 analysts tracking the stock have a hold rating on it while 18 have a sell rating, Bloomberg data showed. Nine analysts have a buy rating. Analysts have largely retained target prices post result.

Edelweiss believes Wipro will continue to grow below industry, justifying current valuation of 17.3 times FY20 estimated earnings per share. “Wipros revenue growth, at 6.9 per cent YoY (constant currency), remains way below peers Read More – Source
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