Wipro: Wipro’s stock slumped 7.87% on the BSE to Rs 513.35. Wipro’s market capitalization on the BSE fell to Rs 2.69 lakh crore.
Wipro shares fell 8% in early trading Monday after the company released its Q1 earnings. Wipro’s consolidated net profit increased by 5.21 percent year on year (YoY) in Q1 to Rs 3,036.60 crore, up from Rs 2,886 crore in the same quarter the previous year. Revenue declined 3.79% to Rs 21,963.80 crore in the June 2024 quarter, compared to Rs 22,831 crore in the same quarter last year. Wipro reported IT service revenue of Rs 21,896 crore.
On the BSE, Wipro shares lost 7.87% to Rs 513.35 in the current session. Wipro’s market capitalization on the BSE fell to Rs 2.69 lakh crore. On the BSE, 5.82 lakh shares of the company changed hands, totaling Rs 30.12 crore in turnover.
Wipro’s relative strength index (RSI) is 67.3, indicating that the stock is not oversold or overbought. The IT stock is trading above the 50-day, 100-day, 150-day, and 200-day moving averages but below the 5-day, 10-day, and 20-day moving averages.
The IT firm expects IT Services revenue in the September quarter to be between $2,600 million and $2,652 million. This equates to a sequential guidance of -1% to 1% in constant currency terms.
In dollars, the IT services segment’s sales will fall 1.2% to $2,625.9 million sequentially and 5.5% year on year. In constant currency (CC) terms, IT Services sector revenue fell 1% quarterly and 4.9% year on year. Wipro said its IT services operating margin was 16.5 percent, up 0.1 percent quarter on quarter and 0.4 percent year on year.
Nuvama, a brokerage firm, has assigned the shares a price target of Rs 557.
Nuvama:
Nuvama has set a price target of Rs 557 for Wipro shares. The brokerage noted a weak start to the year for Wipro, despite improvements in consultancy, BFS, and consumer segments. They expect Wipro to lag behind competitors but believe its low valuation and high dividend yield limit downside risks. Nuvama maintains a ‘HOLD/SN’ rating.
“Wipro’s lackluster start to the year leaves much to be desired. While we see steady improvements, particularly in consultancy, BFS, and consumer, we believe the route to industry average growth will be protracted. We continue to expect Wipro to lag rivals, but its low valuation and high dividend yield restrict the downside possibilities. Brokerage Nuvama advised to keep the ‘HOLD/SN’ designation.
Choice Broking is pessimistic about the technology stock. It has issued a REDUCE recommendation, with a lower target price of Rs 558.
“Wipro has made significant investments to improve its competencies throughout the company. The investments in the AI360 ecosystem, along with the strategic value that the consulting business provides to clients, will enable Wipro to remain competitive, resilient, and a valued partner for its customers. “Due to the significant rise in the stock price over the last month, we are revising our recommendation to REDUCE and establishing a new target price of INR 558. This reflects a 22x PE based on FY26E EPS of Rs 25.3,” said Choice Broking.
Motilal Oswal has a neutral rating on the IT stock. It has reduced its price goal by 10%, to Rs 500.
Motilal Oswal:
Motilal Oswal has maintained a neutral rating on Wipro and reduced its price target by 10% to Rs 500. The brokerage projects a 1.4% revenue CAGR for IT Services from FY24 to FY26 and expects a 16% operating margin in FY25, leading to an 8.0% CAGR in INR PAT during FY24-26. They have lowered their FY25E EPS estimate by 1% while keeping the FY26E EPS unchanged, maintaining their Neutral rating as they find the current valuation fair.
“We project a 1.4% revenue CAGR for IT Services from FY24 to FY26.” For Wipro, we foresee a 16% operating margin in FY25, leading to an 8.0% CAGR in INR PAT over FY24-26.” We reduced our FY25E EPS by 1% and left FY26E EPS unchanged after the first quarter. We maintain our Neutral rating, believing that the present valuation is fair. Motilal Oswal stated that their price target implies 20x FY26E EPS.
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