Wipro - Continued decision delays; sporadic pricing pressure - Motilal Oswal

BFSI under stress; focused on select areas, restructuring capabilities

We attended Wipro's Analyst Day. Key takeaways:

- While Wipro is not yet unduly concerned about demand, delays in decision cycles continue to hurt. Near-term troubles relate more to the BFSI vertical, where Investment Banking continues to see spending cutbacks and pricing pressure.

- The company's growth strategy revolves around focusing on select segments - be it verticals, clients, geographies or services. It has shortlisted 138 clients, with a potential to grow to USD50m+, as its growth drivers. Wipro will also seek to grow by gaining market share amidst the churn happening among vendors.

- Wipro's organization restructuring in terms of workforce realignment is complete, but alignment of capabilities is still underway.

- We expect Wipro to grow its revenue at a CAGR of 15.3% and EPS at a CAGR of 16% over FY12-14. The stock trades at 15.5x FY13E earnings. We believe risk-reward is favorable, given multiple levers to drive efficiency and growth, notwithstanding the near-term headwinds. Maintain Buy.

Source : Equity Bulls

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