Wipro's muted first quarter, cautious outlook see analysts trim targets
Wipro and expect up to 20% downside in its stock price after India's fourth-largest software exporter reported softer deal wins and sharp deceleration in revenue growth versus peers at the end of first quarter. Analysts painted a cautious growth outlook and believed the company is unlikely to see margin improvement, prompting downward revision in earnings estimates. «We cut our FY24e and FY25e EPS by 3.5% and 4.9% to factor in weaker FY24 growth,» said Motilal Oswal in a client note.
«We await further evidence of the execution of Wipro's refreshed strategy, and successful turnaround from its struggles over the last decade before turning more constructive on the stock.» The domestic brokerage expects Wipro's full year FY24 organic growth to be among the lowest among tier-1 IT services peers after reporting weak first quarter earnings and muted second quarter guidance. Despite the cautious outlook, shares of Wipro rose 2.7% on the NSE to close at ₹404.85. Wipro logged 11.9% y-o-y growth in April-June net profit at ₹2,870 crore, missing analysts expectations.
Sequentially, net profit declined 6.6%. Its consolidated revenue stood at ₹22,831 crore, up 6% y-o-y, owing to weakness in the BFSI space. The company has guided revenue growth of -2% to 1% for the second quarter in constant currency terms.
«Growth continues to be affected by low discretionary spends,» said Nomura in a note to clients. «Weakness in growth to continue in the near term.» The foreign brokerage said the second quarter guidance indicates that weakness will persist and it does not expect margins to improve in FY24. Of the 47 analysts tracking Wipro, 11 of them rate the stock 'buy', while 18 of them recommend clients to 'hold' the stock.
Read more on economictimes.indiatimes.com
