Hold Wipro Ltd For Target Rs. 670 - ICICI Direct
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Healthy Q1 performance, strong guidance…
About the stock:
Wipro is an IT, Consulting & BPO catering to BFSI, health, consumer, energy & utility, technology and communication.
* It has 190000 employees serving clients across six continents
* Consistent payout (~70%), healthy OCF to EBITDA ratio of ~89%
Q1FY22 Results:
Wipro reported robust Q1FY22 results
* Revenues increased 12.0% QoQ in CC terms
* Wipro won eight large deals with TCV of US$715 million
* Guided for 5-7% QoQ growth in Q2FY22E
What should investors do?
Wipro’s share price has grown by ~3x over the past five years (from ~| 210 in Jul 2016 to ~| 586 levels in July 2021).
* However, recent run up in price prompts us to maintain HOLD
Target Price and Valuation: We value Wipro at | 670 i.e. 26x P/E on FY23E EPS
Key triggers for future price performance:
* The strategy of new CEO to drive turnaround in the company
* Restructuring of organisation, client mining, aspiration to win one large deal every quarter to drive growth
* Higher penetration in Europe, client mining, acquisition of new logos and traction in digital revenues to further boost revenue growth
Alternate Stock Idea: In our IT coverage we like Infosys.
* Key beneficiary of increased spend in digital technology and industry leading revenue growth
* BUY with target price of |1,825
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