Shares of Wipro NSE 1.11 % plunged as much as 6 per cent and joined the losers pack in Thursday’s trade after reporting a weak set of numbers in the September 2022 quarter.
Following a poor performance in the Q2FY23, brokerage firms remain cautious or negative on the counter and believe that the worst is not over for the stock citing the cautious approach of the management and muted guidance.
Contrary to Dalal Street estimates, the IT services major’s net profit declined over 9 per cent to Rs 2,659 crore in the quarter ended on September 30, 2022, from Rs 2,930.7 crore in the year ago period.
Revenue from operations stood at Rs 22,539.7 crore, a 14.60 percent growth over a year ago. It reported a revenue of Rs 19,667.40 crore in the same quarter previous year.
Despite the muted performance, global brokerage firm CLSA has maintained an outperform rating on Wipro, with a target price of Rs 450 on the stock, signalling about 18 per cent upside in the counter from its Thursday’s lows.
“Q2FY23 results were in line with the estimates,” said the brokerage firm. “Hopeful FY23 commentary but conservative Q3FY23 guidance,” it added.
However, another brokerage firm Citi has maintained its sell call on the IT major with a target price of Rs 370 on the counter. “Q3 growth guidance was below the expectations, which was not a big surprise,” it said.
Among the domestic brokerages, Motilal Oswal remains neutral on the counter with a target price of Rs 380 on the stock, which is proximate to its intra-day lows.
Wipro posted a weak set of Q2 earnings, “we expect its FY23 organic growth to be one of the lowest among Tier-I IT Services play, with margin below the management’s medium-term guided range,” said the brokerage firm.
“We lowered our stimate by up to 6 per cent to factor in a miss on margin,” it added. It is awaiting further evidence of the execution of strategy, and a successful turnaround from its growth struggles over the last decade before turning more constructive on the stock.
