Wipro goes for a tumble, may stay weak in near term
Wipro shares tumbled over 9% in Monday's trading after the company's first-quarter results missed estimates. Analysts expect the stock to underperform its peers such as Infosys and Tata Consultancy Services (TCS) in the foreseeable future till the software major shows signs of revival in revenue growth.
The stock closed at ₹505.35 on Monday, down 9.2% — its biggest single-day fall since March 2020.
Morgan Stanley said it expects Wipro shares' recent outperformance to reverse in the near term. The stock had risen almost 27% from June 3 to July 19.
«We expect Wipro to continue to lag peers on revenue growth in the near term, which would keep its P/E (price to earnings) multiple at a steep discount to peers,» said the brokerage in a client note.
IT stocks were a mixed bag on Monday, as Tata Consultancy Services, HCL Tech, and LTI Mindtree ended less than a percent down from the previous close. Infosys and Tech Mahindra gained 0.95% and 0.11%, respectively. The Nifty IT Index declined 0.38%, while the Nifty ended 0.1% lower, a day ahead of the budget.
"Market had positive expectations from Wipro, but the management guidance for the next quarter dampened investor sentiment," said Mohit Jain, research analyst, Anand Rathi Institutional Equities. «The stock is likely to remain range bound in the near term until visibility on revenue growth improves.»
Wipro shares had rallied following better-than-expected first-quarter earnings by Infosys with traders building bullish bets on these stocks in the derivatives segment.
