At 2:11 PM, shares of Wipro were trading at Rs 498.35, up Rs 32.90 or 7.07% on the Bombay Stock Exchange. As per an ET report, Jefferies and BofA have upheld their ‘Underperform’ rating, while Kotak Institutional Equities advises a ‘Reduce’ and Nuvama suggests a ‘Hold’ stance.
In the December quarter, Wipro witnessed a nearly 12% year-on-year (YoY) decline in consolidated net profit, with figures coming in at Rs 2,694 crore. Simultaneously, the consolidated revenue experienced a 4.4% drop, reaching Rs 22,205 crore. The performance of both the bottom line and topline closely aligned with anticipated outcomes.
Wipro stock: Here is what various brokerages have recommended
Jefferies (Target: Rs 470)
Jefferies has upheld its ‘Underperform’ rating on Wipro, despite revising the price target upward from Rs 385 to Rs 470. The Q3 results surpassed Jefferies’ estimates primarily due to increased margins. However, Jefferies expresses concern over weak Q4 growth guidance and ongoing headcount declines.
Jefferies notes that despite a margin beat leading to a 4-10% increase in EPS estimates, the anticipated 18% upswing indicated by the ADR suggests an excessive level of optimism being factored into the stock.
BofA (Target: Rs 395)
BofA continues to uphold its ‘Underperform’ position on the stock, setting a target price of Rs 395. While acknowledging a tepid performance in Q3, the brokerage finds encouragement in improved commentary and suggests that the sustainability of Wipro’s positive aspects could be beneficial.
BofA observes a persistent decline in revenue through Q3, anticipating a milder dip in Q4. The brokerage notes a more optimistic demand outlook compared to earlier periods, especially in comparison to industry peers. Additionally, BofA highlights the increasing significance of AI in Wipro’s significant deals.
Kotak Equities (Target: Rs 430)
Kotak Equities has reiterated a ‘Reduce’ rating on the stock while maintaining a fair value of Rs 430. Despite Wipro’s reported revenue decline of 1.7% QoQ in constant currency, which is closer to the upper end of the guidance band, the absolute basis remains weak. The brokerage note acknowledges that stringent cost control measures led to a margin beat of 50 bps.
While management hints at green shoots in discretionary demand with the anticipation of double-digit QoQ growth in the consulting practice, Kotak Equities expresses reservations about a quick demand recovery, considering the YoY decline in TCV and the guidance of a revenue decline at the mid-point for 4QFY24. The note concludes that EPS estimates remain largely unchanged.
Nuvama (Target: Rs 460)
Nuvama has maintained its ‘Hold’ recommendation on Wipro and adjusted the target price to Rs 460 from the previous target of Rs 450, valuing Wipro at 18 times the estimated fiscal year 2026 Price-to-Earnings (PE) ratio.
Despite Wipro’s reporting of weak Q3FY24 IT Services revenue at USD 2,656 million (-1.7% CC QoQ / -6.9% CC YoY), which exceeded both Nuvama’s and Street expectations of -2.9% / -2.7% CC QoQ, the brokerage note notes a more positive outlook. Nuvama has upgraded its EPS estimates for FY24E/25E/26E by 0.7%, 1.6%, and 1.5%, respectively.
