- Business
EditorJanuary 15, 2024January 15, 202408 mins
Wipro’s stock witnessed a remarkable 13.10% rally, hitting its circuit limit at Rs 511.95 on the Bombay Stock Exchange (BSE). This surge adds to the stock’s impressive 15% gain over the last month, outpacing competitors like HCL Tech, Infosys, and TCS, which reported increases of 7%, 5%, and 2%, respectively.
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Analyst Insights on Wipro’s Performance:
Analysts suggest that Wipro’s Q3 performance marks an inflection point, with revenues showing degrowth towards the upper end of the guided band—a first in the past four quarters. JM Financial notes that the next quarter’s guidance is incrementally better after three consecutive quarters of sequentially lower bands.
Wipro’s Consulting Business, CAPCO, Indicates Rebound: CAPCO, Wipro’s consulting business, experienced double-digit booking growth, viewed as a first quantitative sign of a rebound in discretionary spending. The exposure to discretionary budgets had previously impacted Wipro’s performance, and analysts see positive signs as the environment turns in its favor.
Analyst Recommendations and Concerns:
- Axis Securities notes that Wipro has lagged in execution despite better results and deal wins, recommending a ‘Sell’ rating due to visibility concerns.
- HDFC Institutional Equities sees Wipro’s trajectory recovering but raises concerns about deal market-share loss, broad-based decline, and a steep decline in T5 accounts.
- Kotak Institutional Equities emphasizes the rigorous cost control that enabled a margin beat but notes a YoY decline in Total Contract Value (TCV) and cautions against a quick demand recovery.
Wipro’s Q3 Financial Overview:
Wipro reported a constant currency revenue degrowth of 1.7%, nearing the upper end of its guidance of minus 3.5% to minus 1.5%. This surpassed analyst projections of 2-4% degrowth. The company’s sales performance exceeded street expectations despite some low-margin client rationalization in APMEA.
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Brokerage Recommendations and Targets:
- Kotak Institutional Equities retains a fair value of Rs 430 with a ‘REDUCE’ recommendation, considering a target of 17 times FY26E.
- Motilal Oswal expects Wipro’s FY24 revenue growth rate to be among the lowest in tier-1 IT services, maintaining a ‘Neutral’ stance with a target of Rs 520.
- Nuvama Institutional Equities suggests a target of Rs 460 on the Wipro stock, anticipating the company to underperform peers.
- Wipro’s stock witnessed a significant rally, analyst recommendations vary, reflecting diverse opinions on its current standing. Positive indicators, such as the rebound in CAPCO, are weighed against concerns about sustained growth and execution challenges. Investors are advised to carefully consider these factors before making investment decisions.
Disclaimer: The views expressed by analysts are their own, and readers are advised to consult certified experts before making investment decisions.
Frequently Asked Questions (FAQs) about Wipro’s Q3 Performance:
Q1: What were the key highlights of Wipro’s Q3 performance?
- A1: Wipro reported a constant currency revenue degrowth of 1.7%, nearing the upper end of the guided band. CAPCO, its consulting business, experienced double-digit booking growth, signifying a potential rebound in discretionary spending.
Q2: How did the stock market respond to Wipro’s Q3 results?
- A2: Wipro’s stock surged by 13.10% to reach Rs 511.95 on the BSE. This remarkable increase in a single day outpaced industry peers, including HCL Technologies, Infosys, and Tata Consultancy Services.
Q3: What do analysts say about Wipro’s Q3 performance and outlook?
- A3: Analysts express cautious optimism. While some acknowledge Wipro’s positive trajectory, others highlight challenges such as deal market-share loss, broad-based decline, and a decline in T5 accounts. Recommendations vary from ‘Buy’ to ‘REDUCE.’
Q4: What sets Wipro apart from its IT peers in the latest quarterly results?
- A4: Wipro is distinguished as the only IT major showing signs of discretionary spending recovery among the latest quarterly reports. Its focus on cost control and positive growth in CAPCO contribute to this positive outlook.
Q5: What are the concerns raised by analysts regarding Wipro’s performance?
- A5: Analysts express concerns about Wipro’s deal market-share loss, broad-based decline within verticals, and a YoY decline in Total Contract Value (TCV). Some caution against a quick demand recovery despite positive commentary.
Q6: How does Wipro’s Q3 performance impact its FY24 outlook?
- A6: While Wipro’s Q3 performance signals an inflection point, analysts remain cautiously optimistic about its FY24 outlook. Concerns about sustained growth and execution challenges prompt varied analyst stances.
Q7: What is the overall recommendation from analysts regarding Wipro’s stock?
- A7: Analyst recommendations range from ‘Buy’ to ‘REDUCE,’ reflecting diverse opinions on Wipro’s current standing. Some suggest cautious optimism, while others highlight challenges that may impact its stock performance.
Please note that these responses are based on publicly available information, and individual investment decisions should consider personal financial goals and risk tolerance.
