Expert says Buy Wipro with price target of Rs 485 - Rs 525, keep Stop-Loss at Rs 390

Wipro share price today: After TCS and Infosys results, Wipro is going to declare its results today. Kotak Institutional Equities forecasts Wipro's sequential constant currency revenue growth of 3.1% driven by ramp up of large deals won in the earlier quarter and typical seasonal strength. Kotak says that it forecasts 140 bps declines in EBIT margin due to wage revisions and hiring of resources at the senior management level. Wipro has been fairly active in large deals. Kotak expects a solid quarter for deal wins, albeit lower than the previous quarter. Kotak expects Wipro to guide for 0.5-2.5% sequential revenue growth for the June 2021 quarter. June is a seasonally weak quarter; yet we expect reasonable growth in the quarter.  Wipro share price today is Rs 428, up Rs 9 or 2.15%. Wirp share price has moved down from Rs 442 to Rs 428 in the last 1 week.

View on Wipro share price: Buy with price target of Rs 485 - Rs 525, Stop-Loss of Rs 390

Ashis Biswas, Head of Technical Research at CapitalVia Global Research says that he expects Wipro to continue to maintain higher growth momentum driven by strong deal book and execution. He expects operating margin to report above the consensus. Technically a bullish flag pattern is appearing in its daily chart around Rs 425 level. Wipro has been trading in an upward trending channel. It has posted a fresh breakout in January 2021, and since then, it has been trading above it, which indicates a positive outlook on the stock. Ashis recommends a buy on Wipro in the range of Rs 410 – Rs 425 maintaining the Target of Rs 485 and then Rs 525 with a Stop-Loss of Rs 390 for a short-term period. 

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Kotak expects focus on the long-term profitability target especially in light of the margin dilutive Capco acquisition. Wipro has made aggressive senior level local hires in the past two months. Stabilization of the new organizational structure and external hires will be an interesting dynamic of focus.

Kotak expects investor to focus on:

(1)   outcome of annual budgeting cycle of clients and its implications for Wipro
(2)   large deal pipeline and pace of decision making
(3)   sustainable GAAP margins in light of margin dilutive acquisitions
(4)   future M&A bets especially after an aggressive Capco acquisition recently
(5)   path to achieving industry matching performance
(6)   stabilization of new organization structure and integration of external hires at the leadership level
(7)   attrition rates
(8)   vendor consolidation decisions