Wipro on April 15 reported a 0.1 percent sequential growth in consolidated profit at Rs 2,972.3 crore for the quarter ended March 2020. The company’s IT services business clocked revenue at Rs 16,334 crore for the quarter. The revenue growth in constant currency came in at 3 percent for the March quarter and the topline growth in dollar terms was reported at 3.9 percent. The company said the March 2021 quarter was its best in the last 10 years. On April 16, the share touched a 52-week high of Rs 471.65, adding nearly 9 percent.
Nomura | Rating: Upgrade to neutral | Target: Raised to Rs 425 from Rs 410. The revenue growth of 3 percent was in line with our expectations, while margin at 90 bps a beat versus our estimates. The revenue growth guidance of 2-4 percent was ahead of our expectations of 1-3 percent. This was the second consecutive quarter of robust execution and we believe it reflects the benefits of steps taken over the past two-three quarters. This positions company to close some of the revenue growth gaps with its peers. We now forecast 18 percent dollar revenue growth in FY22 versus 14 percent and 16 percent for TCS and Infosys, respectively.
Citi | Rating: Upgrade to buy | Target: Raised to Rs 510 from Rs 460. Citi has raised EBIT estimates by 2-3 percent, while EPS changes are 1-2 percent due to higher tax rate assumption and valuations are at 30 percent and 18 percent discount to TCS and Infosys, respectively.
CLSA | Rating: Underperform | Target: Rs 450. The brokerage has said it likes the aggression the company has adopted under new management. The acquisition activity, large deals and internal recast distort the picture. Given an elevated valuation, while retaining the wait-and-watch stance, minor changes have been made to FY22/FY23 EPS (1 percent) estimates.
Jefferies | Rating: Underperform | Target: Rs 380. Revenue and margin were marginally ahead of estimates, while revenue growth was broad-based across markets and verticals. The large deal bookings rose 16 percent QoQ to $ 1.4 billion in the March quarter. The large deal ramp-ups and acquisitions should drive 13 percent revenue CAGR over FY21-23. The wage hikes and acquisitions may keep EPS growth low at a 7 percent CAGR over FY21-23.
UBS | Rating: Neutral | Target: Rs 470. The company delivered Q4 revenue beat and solid Q1FY22 guidance. The guidance was much better than our estimate of -1 to +1 percent.
Motilal Oswal | Rating: Neutral | Target: Rs 455. We lower our FY22E EPS by 6 percent, largely based on upcoming margin headwinds and EPS impact from the Capco acquisition. Our estimate for FY23E largely remains unchanged. We maintain our neutral stance as we await: a) further evidence of execution of WPRO’s refreshed strategy, and b) successful turnaround from its growth struggles over the last decade before turning more constructive on the stock. Our target price implies 19x FY23E EPS.
Sharekhan | Rating: Buy | Target: Rs 510. We have revised our earnings estimates for FY2022E/ FY2023E, factoring in strong deal wins, better-than-expected Q1FY2022 revenue growth guidance and change in USD-INR exchange rates. We believe a leaner organisation structure is providing success to Wipro in terms of taking better decisions on a go-to market strategy and optimise costs. The acquisition of Capco would drive growth, given cross-sell/up-sell opportunities, enhancement of capabilities, the addition of large global financial clients and winning large transformational deals.
Dolat Capital | Rating: Reduce | Target: Rs 430. Given strong growth performance, robust sequential guidance and sustained momentum in deal wins ($ 7.2bn in H2FY21), we have upgraded our topline (IT services in dollar terms) estimates by 0.3 percent/ 1.4 percent for FY22/FY23E. Also, given its operating leverage and staggered wage impact (promotions/hikes to senior resources representing 20 percent of headcount to be effective June), we have increased our margin estimates by ~51bps/60bps forFY22/FY23E.
Prabhudas Lilladher | Rating: Buy | Target: Rs 500. We forecast 17 percent/14 percent revenue growth for Wipro for FY22/23E & expect margins at 18.4 percent/18.3 percent for FY22/23. We value Wipro on FY-23 earnings of 21X (29 percent/43 percent discount to Infy/TCS) to arrive at a changed target price of Rs 500 from Rs 476. Wipro is trading at 19.9X/17.2X for FY22/23E earnings of Rs 21.7/25 respectively with EPS CAGR of 17.2 percent for FY21-23 respectively. Maintain Buy.