New Wipro CEO Will Take Time To Get Things Going, Say Brokerages

Wipro Ltd.'s top-level rejig is unlikely to boost their financials as changes will likely be gradual, according to brokerages, which still have maintained a bearish outlook on the revenue front.

The resignation of Chief Executive Officer Thierry Delaporte a year ahead of the completion of his term, along with several other senior-level exits, reflect the continued execution issues at the firm, Jefferies India Pvt. said in an April 7 note. "Any improvements in performance under the new CEO is likely to be gradual in our view."

Nomura Research said the recovery in revenue growth for Wipro is going to be slow and unlikely to change significantly due to the CEO change in the near term.

Following the resignation of Delaporte, the IT major appointed Srinivas Pallia as its new CEO and managing director.

Investors will await clarity on any strategic or organisational change. Capital allocation and turnaround need to be monitored in a challenging macro environment, Citi Research said on April 7.

Jefferies maintains an 'underperform' rating with a target of Rs 470 apiece, while Nomura and Citi have retained their 'sell' call with a target price of Rs 485 per share and Rs 440 apiece respectively.

Strong execution will address growth underperformance issues for the IT firm, according to Emkay Global Financial Services Ltd. "Srini (Srinivas Pallia) is likely to garner the required support from the rest of the leadership team, founders, and the board to ensure swift corrective actions."

• Citi maintains 'sell', sees valuations at 21 times the one-year forward earnings per share.

• Wipro has seen several CEO changes to revive revenue growth, but it’s still work in progress.

• Investors will keenly await the new CEO’s communication on Wipro’s priorities.

• Large deal wins have been an area where Wipro seems to lag Tata Consultancy Services Ltd. and Infosys Ltd.

• Capital allocation key focus area as Wipro's 40–50% payout is significantly lower than TCS, Infosys.

• Nomura maintains 'reduce' rating on the IT firm with a target price of Rs 410 apiece.

• New CEO to have a head start as he is a 32-year veteran.

• New CEO's task is to bring back revenue at the earliest.

• Senior-level exodus needs to be stemmed immediately.

• Being internal candidates, both CEO and chief financial officer instill confidence.

• Jefferies retains 'underperform' rating with a target price of Rs 470 apiece.

• Wipro CEO's resignation reflects continued execution issues.

• With discretionary demand under pressure, appointment of an internal candidate limits "hopes of a turnaround and rich valuations".

• Any improvements in performance under the new CEO is likely to be gradual in our view.

• The brokerage maintains 'sell' with a target price of Rs 441 apiece.

• External demand conditions to dictate growth trajectory.

• Wipro's consulting unit under Capco to be a drag.

• New CEO to be tested on performance when demand returns.

• Investors, promoters to give new CEO three years to deliver.

• The brokerage maintains 'add' with a target price of Rs 500 per share. 

• Awaits more clarity on leadership transition and any tweaking in growth strategies. 

• Wipro has seen steady churn at the top level since the turn of the century, the highest among India-based IT services firms.

• Pallia is likely to garner better acceptance internally.

• New CEO will take swift actions to arrest churn at senior levels and re-energise employee morale.

• Strong execution will address growth underperformance issues.