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Axis Securities Report
In Q3 FY24, Wipro Ltd.’s reported revenue stood in line with our expectations at Rs 22,231 crore, down 1.4% QoQ and 5.9% QoQ (in constant currency terms).
The company reported operating profits of Rs 3,256 crore, down 1.4% on a QoQ basis. However, its operating margins expanded (above our expectations) and stood at 14.8%, largely led by cost optimisation.
The company’s net profit stood at Rs 2,694 crore, registering a growth of 1.8% QoQ.
Outlook
From a long-term perspective, we believe Wipro has a strong deal pipeline and superior financial structure. However, it lags in execution capabilities to capitalize on growth as compared to peers.
Moreover, rising concerns over the prospects of large economies along with prevailing supply-side constraints pose uncertainties over the company’s short-term growth rates.
Valuation and recommendation
Against this backdrop, we recommend a 'Sell' rating on the stock and assign a 17 times price/earning multiple to its FY26E earnings of Rs 26.5/share to arrive at a target price of Rs 450/share.
The target price implies a downside of 3% from the current market price.
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