Europe is a key bastion of growth for the industry where Wipro has struggled in the recent past and where Delaporte’s experience will be of immense use as well.

Wipro announced the appointment of Thierry Delaporte as its new CEO effective July 6. Delaporte’s experience has an eclectic mix of horizontal expertise and vertical depth. Europe is a key bastion of growth for the industry where Wipro has struggled in the recent past and where Delaporte’s experience will be of immense use as well. Wipro made significant strides under Abid in the areas of automation and localisation with large account mining having improved recently as well. But Wipro’s challenge has been a sub-optimal mix of clients where hunting and new logo efforts could have been better. Opportunity to create shareholder value is immense. Inflection in growth to peer averages can drive significant re-rating.

Thierry has been with Capgemini for 25 years, most recently as COO. He will be based out of Paris and his experience running diverse roles at a European-headquartered global services company will hopefully help Wipro catch up on growth in the region in particular (CC growth in Europe was just 2.6%/-1.3% in FY19/FY20). Wipro made significant progress on imperatives around automation and localisation under Abid. Client mining also improved. Issues with Health Plan acquisition, externalities like Carillion bankruptcy and record retail store closures did blunt some of the progress made organically.

Wipro certainly could have done better in acquiring and scaling up new marquee logos. We await details on the strategic direction that Thierry wants to set for Wipro and his capital allocation priorities. It has strong full services capabilities across applications, infra, BPS and engineering, which should help it as integrated deals gain prominence. It has a strong balance sheet (~Rs 25,000 crore net cash) to craft more complex deal structures and partake in captive buyout opportunities and has durable client relationships.

The task is cut out, though, as multiple organisations have seen leadership changes recently as well with the sole imperative being to accelerate growth. As is typical, there will be some leadership flux as well in the near-term before Wipro settles into a new rhythm. We maintain ‘buy’, given strong credentials of Thierry, Wipro having all key cogs and elements for a turnaround with valuation not pricing in much at 11.5x FY22 EV/FCF.