Wipro - CEO Resigns; Insider Takes Charge: Nirmal Bang

Nirmal Bang Report

Thierry Delaporte, who took up the Chief Executive Officer role in July 2020, has resigned a year before his contract ended in June 2025. He was an external candidate for that role. That he would be forced to resign was widely discussed in the media for six-12 months. There was a perception that he had lost the confidence of Premjis (promoters) not only due to the underperformance vis-a-vis the tier-1 Indian peer set, but also due to the loss of senior Wipro Ltd. talent to other companies.

A string of SBU heads and other senior folks quit over the last two years and joined in senior roles in other firms (some examples: Angan Guha – Head of Americas 2 (~30% of revenue) which housed the critical banking, financial services and insurance unit joined as CEO of Birlasoft in December 2022, Rajan Kohli – the Digital business head joined as CEO of Citius Tech in April 2023, Jatin Dalal – the CFO joined Cognizant in December 2023).

Thierry has been replaced by Srini Pallia who is a 32-year veteran of Wipro and last served as CEO of the Americas 1 unit, a role he took on in January 2021. Americas 1 unit includes healthcare and medical devices, consumer goods and lifesciences, retail, transportation and services, communication, media and info services, tech products and platforms and Latin America.

In the near term, we think external demand conditions will dictate the growth trajectory of Wipro and the consulting unit may act as a drag. The test for Srini Pallia would be how Wipro measures up against its peers when demand normalises. He needs to put in place the blocks now, to see that Wipro starts running fast as soon as the demand picks up. We think both investors and promoters would give him three years to deliver though his tenure has been set at five years.

We maintain a Sell on Wipro with target price of Rs 441, which is based on target price-to-earning multiple of 16.6 times (30% discount to Tata Consultancy Services Ltd.) on FY26E earnings per share.

The high discount of 30% that we are assigning is due to its significantly below peer group revenue performance in the recent quarters and the significantly lower return on invested capital due to its inability to squeeze out enough value from its M&A moves.

We believe the new CEO needs to execute before we can think of changing our target PE multiple

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