Wipro share price jumped 1.6% to Rs 400.8 today despite the IT major’s Q4 earnings missing street estimates on various fronts. The company reported an 11.9 % on-year rise in net profit in the first quarter ended June 30, 2023. Sequentially, however, net profit was down by 6.6% due to a decline in all major financial metrics. The company’s consolidated net profit for Q1FY24 came in at Rs 2,870 crore, missing analyst estimates of Rs 2,976 crore. Revenue for the quarter grew 6% on-year at Rs 22,831 crore as compared to Rs 21,528 crore in Q1FY23, missing estimates of Rs Rs 23,014 crore. Wipro shares have fallen over 1% in the last one year and nearly 30% in the last two years.
Stock Call: Should you buy, sell or hold Wipro stock?
Nuvama: HOLD – Target Price: Rs 400
“Wipro management indicated weak macro and uncertain environment leading to the postponement of discretionary spends – resulting in reducing correlation between deal flow and revenue growth. We cut our FY24E/25E EPS estimates by -3.3%/-3% on lower growth. We continue to value Wipro at 16x FY25E PE, yielding a target price of Rs 400 (earlier Rs 410); retain ‘HOLD’,” said analysts at Nuvama Institutional Equities.
ICICI Securities: SELL – Target Price: Rs 319
“We cut our EPS estimates sharply by 11%/9%/7% over FY24E/FY25E/FY26E due to weaker revenue growth, lower margins and higher tax rates. This leads to our revised 12-month target price of Rs 319 implying a 19% potential downside. Hence we downgrade Wipro to SELL (from Reduce). We believe that the FCF yield (of 4.7% in FY25E) may not be sufficient to justify a 2.4x PEG multiple where Wipro is currently trading at 17.2x FY25E for FY23-FY26E EPS CAGR of 7%,” said analysts at ICICI Securities.
HDFC Securities: ADD – Target Price: Rs 410
“Wipro’s company’s seasonally strong H2 supplemented by Q1 large deal bookings of USD 1.1bn can put WPRO back to sequential growth but with a quarter’s lag as compared to peers. While there aren’t any near-term catalysts, improved payout following an acquisitive strategy in the prior two years and valuations at 16x FY25E limit the downside risk. Maintain ADD on WPRO with an unchanged target price of Rs 410, based on 16x Jun-25E EPS,” said analysts at HDFC Securities.
Kotak: REDUCE – Fair Value: Rs 380
“A vulnerable discretionary heavy portfolio and select cases of loss of wallet share amid a turnaround journey make Wipro vulnerable. We cut FY2024-26 revenue estimates by 2-5%. EPS estimates are unchanged as we account for buyback and change in INR/USD assumptions. Maintain REDUCE rating,” said analysts at Kotak Institutional Equities.
Nirmal Bang: SELL – Target Price Rs 338
“We have tweaked our estimates based on 1QFY24 and the 2Q guidance leading to downward revisions to the diluted EPS for FY24-FY26. We roll forward our valuation to June 2025 while keeping our target PE multiple constant at 13.5x (30% discount to TCS), leading to a Target Price (TP) of Rs 338,” said analysts at Nirmal Bang.