“Demand tailwind is already baked into valuations,” they said.
JPMorgan finds the stock Rs 670 worthy as it believes Wipro has displayed remarkable growth improvement over the last 12 months. Credit Suisse is ‘neutral’ on the stock with a target of Rs 725. Macquarie has an ‘outperform’ rating on the stock with a target of Rs 780, as it increased its EPS estimates by 2-3 per cent for FY22-24. That target suggests a 5.5 per cent upside.
This is even as the stock beat bigger peers TCS and Infosys by a wide margin.
For the quarter, the IT services segment recorded sequential growth of 6.9 per cent in US dollar terms to $2.58 billion for the company. Growth in rupee terms in the IT services segment came in at 8.1 per cent, higher than its guidance of 5-7 per cent.
Wipro said it expects revenues to grow 2-4 per cent in constant currency terms in the December quarter, which was in line with analysts’ expectations.
“Progress on turnaround is solid. However, the stock at 27 times FY2023 and 24.5 times FY2024E does not leave anything on the table, especially noting to suggest turnaround is still work in progress. We raise FY2022-24E EPS by 2-3 per cent, largely revenue-led. We raise fair value to Rs 625, assigning stock multiple of 24 times September 2023 EPS,” said Institutional Equities.
In the past few years, Wipro has underperformed Tier I companies on growth due to its higher exposure to challenged verticals such as Healthcare and ENU. Changes at the company level such as restructuring in India and the Middle East businesses had further constrained growth, analysts said.
“We expect the refreshed strategy of the new management to make the organisation leaner. Its growth-focused and client-centric approach would aid growth over the medium-to-long term,” said Motilal Oswal Securities. The brokerage said it would maintain its ‘neutral’ stance on the stock as it awaits further evidence of execution of the refreshed strategy and successful turnaround from its growth struggles over the last decade.
JM Financial upped its price target to Rs 660 from Rs 630. Motilal Oswal Securities has a target of Rs 710 while Axis Securities has target Rs 775 on the scrip.
Wipro results were announced post market hours of October 13. The scrip has climbed 7per cent to Rs 725.45 a piece since then.
