On Monday, CLSA has revised its price target for Wipro (NYSE:WIT) Ltd. (WPRO:IN) (NYSE: WIT) shares, a major player in the global information technology, consulting, and business process services sector. The firm's price target on the stock has been adjusted to INR588.00, down from the previous INR607.00, while the Outperform (2) rating remains unchanged.
The adjustment comes after Wipro's reported -1% quarter-over-quarter constant currency (CC) revenue growth for the first quarter of fiscal year 2025, which was at the lower end of the company's own forecast range of -1.5% to +0.5%. Additionally, Wipro's guidance for the second quarter of fiscal year 2025 indicates a -1% to +1% CC revenue growth, which falls short of the expected 0-2%.
Despite the subdued revenue growth, certain segments within Wipro showed positive momentum. The Banking, Financial Services, and Insurance (BFSI) and Consumer verticals demonstrated sequential strength. Furthermore, the consulting business, Capco, continued to experience strong demand.
However, a significant deal in the Telecom vertical, valued at US$500 million, did not lead to an overall increase in deal signings. Moreover, Wipro's management has not provided any indications of revenue growth in the Telecom vertical for the upcoming quarters.
Following these developments, CLSA has reduced its earnings per share (EPS) estimates for Wipro for fiscal years 2025 to 2027 by approximately 3%. Despite the reduction in the price target and EPS estimates, CLSA continues to apply a 15% discount to Wipro's valuation compared to Tata Consultancy Services (NS:TCS), acknowledging the potential for margin improvement and growth revival under Wipro's newly appointed CEO. The firm maintains its Outperform rating, reflecting a positive outlook on the stock's performance potential.
In other recent news, Wipro Ltd. has been the focus of various analyst firms, with mixed ratings and adjustments to price targets. Notably, Jefferies raised its price target for Wipro to INR455, despite revenue concerns. The company's first-quarter financial results for the fiscal year 2025 showed revenues falling short of expectations, while profits exceeded estimates, leading to a downward revision of Wipro's earnings per share estimates by Jefferies.
Meanwhile, Citi maintained its Sell rating on Wipro's stock but increased the price target from INR455.00 to INR495.00. This adjustment occurred despite a weaker first quarter and a cautious outlook for the company's second-quarter growth. The firm also noted a decrease in total contract value and headcount, which decreased by 12% and 6%, respectively.
Contrarily, Nomura/Instinet upgraded its rating on Wipro from "Reduce" to "Buy," following the appointment of Srinivas Pallia as the new CEO. The firm anticipates that this leadership change will bring stability and a more effective decision-making process to the company's operations. Similarly, CLSA upgraded its rating from 'Underperform' to 'Outperform' based on the company's successful execution of strategies and the anticipation of a stock buyback.
These are just some of the recent developments surrounding Wipro, illustrating the varying perspectives of different analyst firms.
InvestingPro Insights
As investors digest the latest analysis from CLSA on Wipro Ltd., it’s worth considering additional insights that could provide a more nuanced view of the company’s financial health and stock performance. According to real-time data from InvestingPro, Wipro holds a market capitalization of $31.92 billion and is currently trading at a P/E ratio of 23.85. This suggests that while the company is valued significantly by the market, it trades at a premium relative to its near-term earnings growth.
However, Wipro's financial stability is underscored by its balance sheet, which shows more cash than debt, and the fact that it has been able to maintain dividend payments for 24 consecutive years. This could be a testament to the company's resilience and prudent financial management. Additionally, InvestingPro Tips highlight that 4 analysts have revised their earnings upwards for the upcoming period, indicating a potential positive sentiment among market experts.
For investors looking to delve deeper into Wipro's performance and potential, there are additional InvestingPro Tips available at https://www.investing.com/pro/WIT. These tips offer valuable perspectives and could aid in making informed investment decisions. Moreover, readers can take advantage of the exclusive offer using coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking even more expert insights.
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