Wipro Stocks Outlook: After the results in the IT company Wipro shares are seeing a great boom. Wipro gained 9 percent to Rs 472 in April 16 trading, which is a record high for the stock. The stock closed at Rs 430.70 on Thursday. The fourth quarter has been strong for Wipro. During this period, the company’s IT business has seen good growth. During this period, the company has got very big deals and operating margins have also improved. However, the hike in salary has affected the margins. Since the quarterly results, the brokerage house has also given its opinion on investing in the stock.
Revenue growth is better than estimate
Wipro’s revenue growth in IT services in the CC quarter in the fourth quarter was 3 per cent on a quarterly basis. However, due to salary hike, the Ebit margin has come down by 70bp to 21 per cent. But due to other cast control, it is also better than expected. The company has won 12 major deals in the fourth quarter. The order book of the company has increased by 33 percent to $ 710 million in 2HFY21 on an annual basis.
2,972 crores profit
Consolidated net profit of IT company Wipro grew by 27.7 percent to Rs 2,972 crore on a Salala basis in the fourth quarter ending 31 March 2021. Wipro had a net profit of Rs 2,326.1 crore in the same period a year ago. The company’s revenue grew by 3.4 per cent to Rs 16,245.4 crore during the quarter. Consolidated net profit of the company grew by 11 percent to Rs 10,796.4 crore for the entire financial year. Wipro’s annual revenue grew 1.5 per cent to Rs 61,943 crore in 2020-21.
Looking at the operating front, the company’s EBIT in the March quarter has been Rs 3417 crore. At the same time, EBIT margin stood at 20.92 per cent. CAPCO was acquired in the fourth quarter itself, which is the largest acquisition ever made by the company. The acquisition will further increase the company’s penetration in the global financial services sector.
Disappointment from revenue growth guidance!
According to brokerage house Motilal Oswal, Wipro’s revenue growth guidance for 1QFY22 is disappointing even after winning a strong orderbook and a large deal. Wipro has maintained revenue growth guidance of 2-4 per cent on a quarterly basis for 1QFY22. The brokerage house says that Wipro has been an underperformer in Tier 1 companies in the last few years. This has happened due to high exposure in the chalking verticals like Healthcare and ENU. However, the growth strategy of management will benefit in the mid to long term. But when it comes to the near term, due to restructuring and investment, there can be pressure on margins.
What is your opinion on investment
Brokerage house Motilal Oswal has set a target of Rs 455, giving a neutral rating in the stock. At the same time, brokerage house Dolat Capital has reduced the target to Rs 430, while recommending to reduce the shares. Brokerage house CITI has fixed the target at Rs 510, recommending buying in Wipro.
UBS has also given a neutral rating on Wipro and has set a target of Rs 470 for the stock. While brokerage house CLSA has given an underperform rating on Wipro and has fixed the target at Rs 450. While giving an underperform rating, Jefferies has set the target at Rs 380.
(Note: We have given information here based on the company’s quarterly results and brokerage house report. Seeing the risk of the market, take the opinion of the experts before investing.)