Mumbai: Brokerages raised target price on Wipro after the IT major reported a 2.8% sequential rise in consolidated net profit for the June quarter.

Nomura and Kotak Institutional Equities have raised target price on Wipro by 20% each and IDBI Capital has raised target price by 23%. Morgan Stanley, CLSA, Emkay, HSBC, IIFL and Investec have raised target price by 2-14%.

Select brokerages such as Credit Suisse and Kotak Institutional have upgraded the stock but overall, ratings are mostly unchanged at hold, underweight, or reduce. Investec has a buy rating on the stock.

Brokerages believe sustaining momentum can be tough.

"Aggressive cost control put in place in 1QFY21 (June quarter) should flow-through in 2Q as well but
sustaining momentum over 2HFY21 could be difficult if revenue growth recovers," said CLSA.

"At a 13 times 12-month forward PER (price-to-earnings ratio), we will wait for better visibility on the new CEO’s agenda to review our rating. A potential buyback (the window opens in September 2020) could limit downside for the stock," said CLSA. Nomura said Wipro's first quarter results were in line with forecasts on revenues but IT services EBIT margins surprised positively with around 140 basis points improvement on a sequential basis.

"We expect a 1.5% q-q (quarter on quarter) fall in 2Q (September quarter) vs growth at TCS/INFO of 1-2%. Growth underperformance at WPRO vs peers is likely to continue given: 1) softer outlook across verticals and deal pipeline and 2) weak positioning in Retail, Mfg (manufacturing) and Healthcare and client-specific challenges in BFSI," said Nomura.

HSBC said margin resilience in the first quarter was noteworthy but growth outlook remains blurry.