Wipro at 52-week low as analysts cautious after weak Q2 show

Mumbai: Most analysts maintained or trimmed their price forecasts on IT major Wipro and warned of further pain following weaker-than-expected September quarter earnings.

Wipro's shares declined more than 7%, or ₹28.65 per share, to close at ₹379.10 after India's fourth-largest IT services firm's December quarter guidance fell short of market expectations.

The stock touched its 52-week low of ₹378.10 during Thursday's trading and eroded nearly ₹15,700 crore of investor wealth.


Brokerage Credit Suisse downgraded the stock and slashed the target price by 15.6% to ₹350 per share. BNP Paribas, Emkay Global, HDFC Securities, and Investec Capital also trimmed their price forecasts in the range of 1-3%.

"We cut our FY23, FY24, and FY25 EPS (earnings per share) estimates by 4%, 5.8%, and 1.8%," said Investec Capital analysts Nitin Padmanabhan and Divyesh Mehta in a client note. "Wipro's management highlighted it was difficult to take a call on furloughs and a slowdown was already visible in the technology vertical. The company also expects potential weakness in retail, manufacturing, and a slowdown in the acquired consulting business."

Jefferies maintained its underperform with a target price of ₹360.

"Wipro's deal bookings were healthy with the company signing 11 large deals worth $725 million in the second quarter and total deal bookings up 24% year-on-year," said Jefferies analysts Akshat Agarwal and Ankur Pant in a client note. "Management highlighted that while the deal pipeline remains strong, uncertainty amongst clients is rising."

The stock has lost nearly 50% of its value since the start of calendar 2022 amid concerns that a recession in the US will trigger a slowdown in IT spends.

CLSA, while maintaining its outperform rating and price target, said that Wipro's underperformance vis-a-vis the IT Index and a discount to TCS (30% over a five-year median) will support the fall in the stock price.

"Wipro absorbed the wage hike and promotions impact well in Q2FY23 but margin management remains a tight walk. We cut our FY23 and FY24 EPS estimates by 4% and 1%. However, a modest valuation and improving cash generation should lend support to the stock," said Pankaj Kapoor, analyst at CLSA.