Mumbai: Brokerages have increased target price on Wipro after company delivered higher-than-expected growth in margins in December quarter.
However, most retained sell or neutral rating due to muted guidance for fourth quarter and as growth continues to lag peers.The company posted a 34.9 per cent quarter-on-quarter rise in consolidated net profit to Rs 2,544 crore during December quarter while consolidated revenues increased 3.5 per cent from a quarter ago to Rs 15,059 crore.
Wipro announced an issue of bonus shares and interim dividend.Releasing numbers after Indian market hours on Friday, Wipro lowered margin guidance for its IT services business in range of $2,047 million to $2,088 million for March quarter, which translates into a flat 2 per cent sequential growth.Wipros American Depository Receipt on NYSE ended up 1.9 per cent in US on Friday, indicating that stock could open to marginal gains on Monday.
The stock ended up 2.9 per cent at Rs 346.20 on BSE on Friday.Citi has advised that one should adopt a sell into strength approach on stock.
The firm has retained sell rating but increased target price to Rs 325 from Rs 315.Growth continues to lag peers; BFSI growth key to watch out for.
Stock may get near term boost due to reported margins Sell into strength, said Citi.CLSA has also retained sell rating given lack of convincing acceleration in growth.While there has been some improvement in BFSI (banking and financial services), growth appears concentrated and needs consistency.
Soft 4Q (January-March) guidance implies just a 2 per cent exit rate when industry growth is accelerating, said CLSA.Among other brokerages, Nomura has maintained neutral stance with a target price of Rs 320.
Jefferies has increased target price to Rs 290 from Rs 270 but maintained underperform.
HDFC Securities has increased target price marginally to Rs 330 from Rs 325 but retained neutral stance.Phillip Capital, however, has retained a buy stance.We continue to believe in Wipro turnaround story and expect company to touch industry average growth rate by FY21, as its smaller ailing verticals start supporting, rather than dragging, larger performing verticals, said Phillip Capital.