Wipro Ltd. share price target

Wipro is struggling to grow (+2.9% YoY in FY19) whereas larger peers are clocking double digit growth rate. BFSI, which was the key revenue driver for Wipro is witnessing slowdown. Issues such as (1) Completion of large projects (Consumer), (2) Delay in decision making (BFSI, Manufacturing) and (3) Deferral in ramp-up of large projects is impacting growth. The soft guidance for 2QFY20 indicates that the lag is entrenched. Margin expansion is difficult and the buyback trade is over. Wipro has underperformed in last 3M (-8% vs NIFTY IT -3%) and the trend will continue unless growth revives. We expect USD revenue growth of 3.0/5.4% and IT services EBIT% at 18.1/18.3% for FY20/21E. Wipro trades at 14.7x FY21E EPS (in-line with Tier-1 median), which is rich considering its growth profile. Our SELL stance is driven by the weakness in core growth metrics and execution challenges. Risk to our thesis include improved US/Europe macro and INR depreciation. We maintain SELL on WIPRO, post weak 1QFY20 and tepid guidance for 2Q. Wipros revenue growth remains the lowest in tier-1 IT. In view of growth challenges, peaking margins and taxation on buyback we further cut our target multiple. Our TP of Rs 220 is based on 12x (vs. 14x earlier) Jun-21E EPS.

Wipro's (WPRO) Q1FY20 IT Services and consolidated revenue growth was in-line with our forecast. EBIT margin of 16.2%, -80bps QoQ, was also in-line with our forecast. EPS of Rs3.97, -3.9%/+12.5% QoQ/YoY was a beat to our forecast aided by higher other income & FX gain and lower tax rate. Q2FY20 guidance of IT services revenue growth of 0% to +2% is in-line with our forecast. WPRO has got shareholders' approval for its share buyback of Rs105 bn for 323.1mn shares (5.4% of equity capital) and is awaiting approval from SEBI. It expects to complete the buyback by end-August, however it would monitor the final outcome...

IT services revenue de-grew 0.7% sequentially in constant currency. The revenue de-growth in Q1 and conservative revenue guidance for Q2FY20E (0-2% QoQ) was due to deferral of some deals and slower ramp ups of some projects. The impact of the same was most noticeable in the consumer business unit segment wherein revenues declined 4.4% QoQ. In addition, softness in capital markets and weakness in European banks continued to impact banking & financial services, similar to TCS & Infosys. Going forward, the consumer segment is expected to revive from Q2 onwards based on...

We believe that Wipro is struggling to achieve any degree of consistency. The timing of the recovery remains key & revenue growth of Wipro is never broadbased. The company's revenue growth has been below 1% (Q/Q CC) in 8 of the past thirteen quarters, suggesting that growth momentum is difficult to predict. We expect 4.5% & 7.3% USD revenue & EPS CAGR for FY19E-FY21E respectively & value Wipro at 14.5x Mar-21 earnings to arrive an changed...

Wipro (WPRO) reported another tepid quarter as a wind-down of large projects in the retail & CPG ver

Wipro delivered lower-than-expected revenue performance for Q1FY2020. However, adjusted EBIT IT margin remained a tad ahead of our estimates. Soft growth was due to weakness in the BFSI, consumer, healthcare and manufacturing verticals. BFSI growth was impacted by weakness in European Banking and overall capital market. However, management expects the healthcare vertical and engineering practices to bounce back during 2HFY2020E. Digital business reported strong growth during the quarter, contributing 37.4% to total revenue. Management has guided for...

Wipro Ltd. is an Indian multinational corporation and a leading global information technology, consulting and business services company. It is headquartered in Bengaluru, Karnataka, India. The company is into cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help the clients adapt to the digital world and make them successful. A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship,...

On sequential basis, for the quarter ended March 2019, Wipro consolidated sales grew 1% to Rs 15160.9 crore. OPM fell 40 basis points to 21.5% which saw OP fall 1% to Rs 3257.80 crore. Other income grew 20% to Rs 754.4 crore and interest cost rose 56% to Rs 2530 crore. After providing for depreciation (up 8% to Rs 559.3 crore), PBT fell 1% to Rs 3199.9 crore. Provision for taxation went up 1% to Rs 706.4 crore after which PAT fell 2% to Rs 2493.50 crore. Minority interest and share of profit/loss on associate companies stood at a loss of Rs 10.4...

Q1FY20 guidance of IT services revenue growth of -1.4% to +0.6% is a miss. However, share buyback of Rs105 bn for 323.1mn shares (5.4% of equity capital) is positive and especially the buyback extremely attractive. We factor weak EBIT margin in Q4FY19 and muted guidance for Q1FY20. However, it would be more than offset by benefit of share buyback, resulting in a 2.9% increase in our FY20E EPS. We introduce FY21E financials. We forecast IT services revenue (in US$) and EPS CAGR of 6.1% and 4.9% respectively over FY19-21E. We roll-over to FY21E and...

Wipro's revenues grew 1.4% QoQ mainly led by 6.3% QoQ growth in digital revenues. However, pressure in traditional revenues arrested the growth. Besides digital, growth was supported by consumer business unit (grew 5.3% QoQ in CC terms) followed by healthcare and BFSI. We expect growth...