Brokerages have mixed views on Wipro post Q4 results
IT major Wipro has logged hefty losses by falling nearly 8 per cent since it announced a muted set of fourth quarter numbers on Tuesday.
By ET Online | Updated:
MUMBAI: IT major Wipro has logged hefty losses by falling nearly 8 per cent since it announced a muted set of fourth quarter numbers on Tuesday. The company missed the revenue growth expectations by a whisker. The conservative guidance for the June quarter too dented investor sentiment on the counter. Margins growth emerged as the only bright spot for the software services exporter.
The stock dropped 1.76 per cent in trade on Thursday, in addtion to 6 per cent fall in the preceding session.
Post the fourth quarter results, brokerages have turned mixed on the stock. While some see it as a ‘Buy’, others have maintained ‘Sell’ and ‘Neutral’ recommendations on it.
Credit Suisse has maintained its ‘Outperform’ rating on the stock, but has lowered its target price to Rs 700 from Rs 725 earlier. According to the brokerage, lack of growth continues for the company and Q1 guidance is soft even for a slow quarter.
"While the June quarter tends to be slow for Wipro, unlike that for peers, 1Q FY16 guidance is soft. Wipro has guided to revenue of US$1,765– 1,793 mn, implying -0.6% to +1 % growth in constant currency terms. Management cited weakness in the energy sector and weaker spending by a specific financial service client as the reasons for this," the brokerage said.
The brokerage has cut estimates 3–4 per cent and the target price to Rs 700 from Rs 725 to adjust for currency movements and the slow start in FY16.
"We believe valuations continue to be very attractive at 15x 12M forward earnings, but a sustained pick-up in growth is required as a catalyst," it said.
UBS has maintained ‘Sell’ on the stock. It is worried about industry-wide slowdown and is of the view that Wipro may not be able to meet the Nasscom guidance of 12-14 per cent.
According to the brokerage, Wipro’s revenue turnaround will be delayed and slower revenue growth will limit valuation upside. It has maintained a ‘Sell’ rating on the stock.
Meanwhile Bank of America Merrill Lynch has maintained ‘Neutral’ rating on stock, but lowered Wipro’s target price. The company’s results are below the brokerage’s expectations in 2-4 per cent range, led by a sharp deterioration in the E&U business and a temporary slowdown in one of the key BFS clients.
"Wipro is likely to grow in single digits in FY16 for the fourth consecutive year," the brokerage said.
"Wipro is trading at a PE of c16x on our FY16e revised earnings. We continue to value Wipro at a 10 per cent discount to Infosys. We value the stock at 18x FY16e earnings," it added.
Following are some brokerages’ recommendations on Wipro:
The stock dropped 1.76 per cent in trade on Thursday, in addtion to 6 per cent fall in the preceding session.
Post the fourth quarter results, brokerages have turned mixed on the stock. While some see it as a ‘Buy’, others have maintained ‘Sell’ and ‘Neutral’ recommendations on it.
Credit Suisse has maintained its ‘Outperform’ rating on the stock, but has lowered its target price to Rs 700 from Rs 725 earlier. According to the brokerage, lack of growth continues for the company and Q1 guidance is soft even for a slow quarter.
"While the June quarter tends to be slow for Wipro, unlike that for peers, 1Q FY16 guidance is soft. Wipro has guided to revenue of US$1,765– 1,793 mn, implying -0.6% to +1 % growth in constant currency terms. Management cited weakness in the energy sector and weaker spending by a specific financial service client as the reasons for this," the brokerage said.
The brokerage has cut estimates 3–4 per cent and the target price to Rs 700 from Rs 725 to adjust for currency movements and the slow start in FY16.
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"We believe valuations continue to be very attractive at 15x 12M forward earnings, but a sustained pick-up in growth is required as a catalyst," it said.
UBS has maintained ‘Sell’ on the stock. It is worried about industry-wide slowdown and is of the view that Wipro may not be able to meet the Nasscom guidance of 12-14 per cent.
According to the brokerage, Wipro’s revenue turnaround will be delayed and slower revenue growth will limit valuation upside. It has maintained a ‘Sell’ rating on the stock.
Meanwhile Bank of America Merrill Lynch has maintained ‘Neutral’ rating on stock, but lowered Wipro’s target price. The company’s results are below the brokerage’s expectations in 2-4 per cent range, led by a sharp deterioration in the E&U business and a temporary slowdown in one of the key BFS clients.
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"Wipro is likely to grow in single digits in FY16 for the fourth consecutive year," the brokerage said.
"Wipro is trading at a PE of c16x on our FY16e revised earnings. We continue to value Wipro at a 10 per cent discount to Infosys. We value the stock at 18x FY16e earnings," it added.
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Following are some brokerages’ recommendations on Wipro:
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