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Credit Suisse downgraded its rating on software services provider Wipro Ltd to ‘under-perform’ from ‘neutral’. It has also cut the company’s target price to Rs 320 from Rs 370.
The company’s shares, which is the top drag on NSE index, has fallen 2.4 per cent to Rs 378.2.
Credit Suisse analysts say while the margin recovery over the last few quarters was creditable, FY18 margins were at a 5-year low and the expansion this year has to be seen in that context. They also believe that there is limited scope for similar margin expansion in FY20 due to higher onsite costs and absence of currency kicker.
“Wipro deserves to trade at a reasonable discount to both Tata Consultancy Services and Infosys, given consistently slower growth rates and a lower (and more volatile) margin trajectory,” Credit Suisse said. “Wipro's sales engine has to become more effective so that the growth gap versus peers get bridged to some extent.”
The share closed at Rs 373.55, down Rs 13.65 (-3.53%) on the BSE, and at Rs 374.95, down Rs 12.70 on the NSE.
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