The shares of IT major Wipro Ltd. tanked more than 7% in the early hours of trading on Thursday. The stock of Wipro hit its new 52-week low of Rs. 380 per share. It has declined 47% in value since the start of this year. As of 11:30 IST on Friday, the shares were trading at Rs. 384 a piece.
The company announced its second quarter (June to September) results for the financial year 2022-23 yesterday. It clocked 12.9% year-on-year (Y-o-Y) growth in IT services sales in constant currency terms during the quarter. The segment’s earnings before interest and taxes (EBIT) dropped 1.8% to Rs. 3,380 crores from Rs. 3,441 crores it registered during the same period last year.
However, during the same period, its operational figures metrics suffered a drop. The net profit fell 9.6% from Rs. 2,930 crores last year (Q2FY22) to Rs. 2,649 crore.
All this comes on the heels of a slowdown in the US and Europe markets which account for a primary share of Wipro’s revenues. Akshara Bassi of Counterpoint Research commented, “Most of the growth in Wipro’s IT services revenues seem to be coming off the back of previous order completions.”
In addition to this, she noted, “Their new order bookings for the September quarter are not particularly strong on IT services, and other sectors such as healthcare and pharma in markets such as the European Union and North America seem to be the key drivers this quarter.”
Market analysts have given mixed comments on the future performance of Wipro. For instance, Nomura cut its FY23-24 earnings per share estimates by 3-5% and gave a ‘neutral’ call on the stock with a price of Rs. 380.
Analysts at JP Morgan have a negative outlook on the stock with an underweight call with a target price of Rs. 360 per share, suggesting a drop of 5.26% from the present levels.
However, UBS’ ‘neutral’ call at Rs. 420 per share still offers potential gains of 10% for the investors. This is further strengthened by the bullish outlook the brokerage house HDFC Securities has maintained with its ‘add’ call on Wipro stock. Its analysts see a 21% upside with a target price of Rs. 460 on the back of growth in IT services.
Written By – Vikalp Mishra
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