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Target: ₹432
CMP: ₹398.65
Wipro has reported mixed financial performance for the quarter. The revenue growth was below expectation(cc growth of 0.6% QoQ), EBIT margin came in slightly above estimates. The sequential growth was led by Healthcare & Life Sciences vertical (up 5.5 per cent QoQ) and Energy, Natural Resources & Utilities vertical (up 2.0 per cent QoQ).
The INR reported growth was supported by depreciation of INR by 2.9% QoQ vs USD. There was sequential improvement in EBIT margin(up 165bps QoQ) led by falling attrition, improving pyramid and INR depreciation.. The moderation in employee attrition continues as LTM attrition was down 180 bps QoQ to 21.2 Per cent.
However, the clients remain cautious regarding the evolving macroeconomic situation especially in the US and Europe and consequently, we expect moderation in growth in near term.
We estimate revenue CAGR of 11.7 per cent over FY22‐24 with average EBIT margin of 15.3 per cent. We maintain our Neutral rating on the stock with revised target price of ₹ 432/share at 18.0x on FY24 EPS (earlier target price was ₹389). The stock trades at PER of 18.9x/16.5x on FY23E/FY24 EPS.
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