Wipro Investors Have Missed The Bus

Investors in Wipro Ltd. will be disappointed.

It’s the sole information technology stock to fall so far this year when the software services sector returned gains. In fact, the Nifty IT Index is the only sectoral gainer this year, rising 10 percent.

Also, weakness in Wipro is expected to continue. India’s third-largest software services provider by sales has a return potential of only 3.3 percent, according to Bloomberg consensus target.

For the December-ended quarter, Wipro was one of two IT companies to report contraction in margins along with HCL Technologies Ltd. Their margins narrowed by 245 basis points and 12 basis points, respectively. (A basis point is one-hundredth of a percentage point).

In contrast, Tech Mahindra Ltd. has been the highest gainer, rising more than 20 percent so far this year. Its margin expanded by 169 basis points, the highest among Nifty IT companies, in the previous quarter.

Tata Consultancy Services Ltd. and Infosys Ltd. have yielded double-digit returns in 2018, while HCL Technologies has risen in single digit.