Buy Wipro; target of Rs 285: ICICI Direct
ICICI Direct’s research report on Wipro
Wipro reported an in line quarter on all fronts. In constant currency, global IT services revenues grew 1.8% sequentially (ITI acquisition contribution 0.3%) while EBIT margins expanded 30 bps QoQ to 18.4%. Key highlights of the quarter were: 1) Digital (39.8% of revenue) grew at 2.8% QoQ, 22.7% YoY, 2) decline in voluntary attrition to 15.7% (vs. 17.0% in Q2) and 3) Addition of one client QoQ in US$ 100 million+ bucket. Besides the technology segment, growth was broad based among verticals.
An in line quarter, scope for margin expansion and attractive valuations prompt us to be positive on the company. Coupled with digital acceleration, pick-up in execution, commentary on deal pipeline front is expected to lead to an improved growth trajectory in the next two years. This, along with reasonable valuation (~12x FY22E EPS) prompts us to maintain BUY on Wipro with a target price of Rs 285/share.
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