Hold Wipro, target price Rs 210: Emkay Global
The target price is based on 12 times FY22E EPS (vs. 11 times earlier) as the uncertainty around the leadership transition fades.
Emkay Global has a hold rating on Wipro with a 12-month target price of Rs 210.
New CEO Thierry Delaporte takes charge in the time of recession and will have his task cut out given Wipro’s long-standing struggles around client relevance, differentiation and strategy. The Street has been enthused with CEO changes in the past (2011 and 2016), hoping for turnaround and improvement in Wipro’s fortunes but has been disappointed as Wipro’s underperformance has continued.
Investment Rationale
The brokerage has retained a hold rating on Wipro, with a revised target price of Rs 210 (Rs 195 earlier), based on 12 times FY22E EPS (vs. 11 times earlier) as the uncertainty around the leadership transition fades. The brokerage had upgraded Wipro to hold rating in March 20 on cheap valuations (cash at 20 per cent+ of the market cap and ~8 per cent FCF yield at CMP) and continues to find valuations inexpensive relative to peers.
Financials
For the quarter ended March 31, 2020, the company has reported consolidated sales of Rs 15711.00 crore, up 1.55 per cent from last quarter sales of Rs 15470.50 crore and up 4.70 per cent from last year's same quarter sales of Rs 15006.30 crore. The company has reported net profit after tax of Rs 2343.90 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 74.03 per cent stake in the company as of March 31, 2020, while FIIs held 8.45 per cent, DIIs 7.03 per cent and public and others 10.49 per cent.
New CEO Thierry Delaporte takes charge in the time of recession and will have his task cut out given Wipro’s long-standing struggles around client relevance, differentiation and strategy. The Street has been enthused with CEO changes in the past (2011 and 2016), hoping for turnaround and improvement in Wipro’s fortunes but has been disappointed as Wipro’s underperformance has continued.
Investment Rationale
The brokerage has retained a hold rating on Wipro, with a revised target price of Rs 210 (Rs 195 earlier), based on 12 times FY22E EPS (vs. 11 times earlier) as the uncertainty around the leadership transition fades. The brokerage had upgraded Wipro to hold rating in March 20 on cheap valuations (cash at 20 per cent+ of the market cap and ~8 per cent FCF yield at CMP) and continues to find valuations inexpensive relative to peers.
Financials
For the quarter ended March 31, 2020, the company has reported consolidated sales of Rs 15711.00 crore, up 1.55 per cent from last quarter sales of Rs 15470.50 crore and up 4.70 per cent from last year's same quarter sales of Rs 15006.30 crore. The company has reported net profit after tax of Rs 2343.90 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 74.03 per cent stake in the company as of March 31, 2020, while FIIs held 8.45 per cent, DIIs 7.03 per cent and public and others 10.49 per cent.