Wipro Ltd - Q1FY21 Result Update - ICICI Securities

Wipro's revenue growth has lagged industry growth mainly due to a higher drop in legacy revenues, lower growth in digital revenues (28% over FY18-20) vs. Infosys (34% CAGR) and lack of aggressive hunting & acquisition of new logos. We believe Wipro has all the key ingredients of robust growth in the long run. The company has strong full services capabilities across applications, infra, BPS and engineering, which should help it as integrated deals gain prominence. Wipro has a strong balance sheet to craft more complex deal structures, undertake captive buyout opportunities and has durable client relationships to benefit from vendor consolidation. Further, the induction of a new CEO with focus on profitable growth and its immense experience in IT field make us positive on the company's future growth. Hence, we expect Wipro could see healthy improvement in revenue growth, which is key to its re-rating. This, coupled with reasonable valuations, prompt us to be positive on the stock from a long term perspective.

Valuation & Outlook

We expect Covid-19 disruptions to impact revenues in the near term. However, considering the margin improvement in Q1FY21E and improvement in growth from Q2FY21E, we expect margins to witness expansion in FY21E, FY22E. Further, we expect Wipro to witness healthy growth revenue in coming years mainly led by healthy traction in deals, growth focus of new CEO, acquisition of new logos and traction in digital revenues. This, along with reasonable valuation (~13x FY22E EPS) prompts us to maintain BUY on Wipro with target price of Rs. 300 (16x FY22E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Wipro_Q1FY21.pdf

Shares of WIPRO LTD. was last trading in BSE at Rs.262.95 as compared to the previous close of Rs. 225.05. The total number of shares traded during the day was 6313161 in over 76545 trades.

The stock hit an intraday high of Rs. 265.5 and intraday low of 233.8. The net turnover during the day was Rs. 1629694172.

Source : Equity Bulls

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