Analysts Hike Target Price For Wipro After Q1 Results
Entrance of Wipro’s headquarters in Bengaluru, India. (Photo: BloombergQuint)

Analysts Hike Target Price For Wipro After Q1 Results

Most analysts hiked target price for Wipro Ltd. after the software services exporter’s profit and margin beat estimates in the quarter ended June even as the coronavirus pandemic disrupted business.

Net profit rose 2.8% over the preceding quarter to Rs 2,411 crore in the April-June period, according to its exchange filing. Its IT services margin expanded to 19% from 16.1%. That came as employee costs reduced and the rupee depreciated.

The company also continued to sustain robust cash generation with operating cash flows at 174.9% of net income, Jatin Dalal, chief financial officer, was quoted as saying in a media statement.

Of the 47 analysts tracking the stock, 15 have a ‘buy’ rating, 17 suggest a ‘hold’ and the rest recommends a ‘sell’. The average of Bloomberg consensus 12-month target prices implies a downside of 2.3%.

Also read: Wipro Q1 Results: Profit Rises Despite Disruption From Covid-19 Pandemic

Here’s what analysts have to say about Wipro’s first-quarter results:

CLSA

  • Maintains ‘underperform’ rating; hikes price target to Rs 215 apiece from Rs 210
  • Cost controls, working capital management impressive
  • Commentary on near-term outlook optimistic
  • Sustaining medium-term momentum can be a challenge if revenue growth remains below peers
  • Leadership transition can keep revenue growth verus margin equation volatile
  • Will wait for better visibility on the new CEO's agenda to review rating
  • A potential buyback can limit the downside for the stock

Macquarie

  • Maintains ‘neutral’ rating; raises price target by about 5% to Rs 210 apiece
  • Expects more clarity on the new CEO's strategy in the next three months
  • Deal pipeline healthy but decision-making remains slower than pre-Covid levels across most clients
  • Expects overall revenue decline of 7.6% year-on-year in the ongoing financial year
  • EBIT margin may improve 20 basis points year-on-year to 17.5%
  • While worst is likely behind, revenue recovery likely to be gradual
  • Uncertainty persists in certain verticals
  • Raises FY21-22 estimated EPS by 2.6-7%

Citi Research

  • Upgrades to ‘buy’ from ‘neutral’; hikes price target to Rs 260 apiece from Rs 230
  • Managing costs well and delivering solid cash flows despite lagging peers on growth
  • Some part of the cost benefit to stay in the medium term
  • Upgrades FY21-23 estimated EPS by 3-6%
  • Raises price target multiple to 14 times from 13 times
  • Introduces a positive 90-day catalyst watch, given potential buyback and growth focused commentary from the new CEO
  • Margin resilience, attractive valuations and likely buyback should help

Emkay Global

  • Retains ‘hold’ rating with a target price of Rs 240 apiece
  • Sharper-than-expected revenue fall
  • Management sounded more circumspect than TCS
  • Operating margins well defended
  • Saw improvement in cash generation
  • Company targeting stability and holding margins
  • Finds valuations attractive at 13 times estimated FY22 price-to-earnings
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