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ICICI Securities Report
Wipro Ltd. has reported in-line earnings in Q4 FY24, with better execution at margin front. Bookings were strong at $3.6 billion. IT services Ebit margin was impressive, up 40 bps QoQ, despite headwinds from wage hikes and revenue decline. Highlights from Q4 include:
Recovery in Capco and
new CEO's strategy of doubling down on execution.
We are sceptical on Capco growth, which appears more like positive seasonality and a result of low base effect. We presume the CEO's strategic pivot towards better execution and large deal focus as a long-term play and see limited positive triggers in short-medium term as Wipro's portfolio carries a high discretionary component (reflected in muted FY25 revenue guidance of -1.5% to 0.5%).
We value Wipro at 16 times (unchanged), on FY26E earnings per share of Rs 26 (FY25-26E EPS kept largely unchanged) to arrive at our target price of Rs 410 (versus Rs 397 earlier).
We revise the rating to Reduce (from Sell earlier) as the stock has reduced more than 7% over last month and we see limited downside from hereon.
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