Buy Wipro; target of Rs 250: ICICI Securities
ICICI Securities is bullish on Wipro has recommended buy rating on the stock with a target price of Rs 250 in its research report dated May 30, 2020.
ICICI Securities research report on Wipro
Wipro announced the appointment of Mr. Thierry Delaporte as the new CEO of the company effective July 6, 2020. Mr. Delaporte’s experience has an eclectic mix of horizontal expertise (being the COO in his recent role at Capgemini and being the global head of all service lines earlier) and vertical depth (having run Financial Services as a vertical). Europe is a key bastion of growth for the industry where Wipro has struggled in the recent past (CC growth of 2.6%/-1.3% in FY19/FY20) and where Mr. Delaporte’s experience will be of immense use as well. Wipro made significant strides under Abid in the areas of automation and localisation with large account mining having improved recently as well. However, Wipro’s challenge has been a sub-optimal mix of clients where hunting and new logo efforts could have been better, which should be a key area of focus for Mr. Delaporte. Opportunity to create shareholder value is immense – as an example, Wipro generated as much FCF as HCL Technologies in the past 3 years in aggregate and yet HCLT’s EV is 1.5x higher – inflection in growth to peer averages can drive significant re-rating.
We maintain BUY given strong credentials of Thierry, Wipro having all key cogs and elements for a turnaround with valuation not pricing in much at 11.5x FY22 EV/FCF.
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First Published on Jun 2, 2020 12:21 pm