Wipro shares were in focus in the trading session on Monday, December 18. This comes on the back of global brokerage Citi pointing out that the IT services firm’s CFO meet takeaways show that there is no change in the third quarter visibility versus the start of the quarter.
The New York-based brokerage, which has a sell call on the Wipro stock, has set a target price of ₹360. This means, it sees a further 19% downside in the stock from the December 15 closing price.
Domestic brokerage Motilal Oswal Financial Services, meanwhile, had given the stock a 'neutral' rating with a target of ₹460.
Wipro has remained an underperforming stock this year when compared to peers (except Infosys) as well as the sectoral Nifty IT index. The stock has given a return of nearly 14% to its investors in 2023 (year-to-date) as against the benchmark Nifty 50 which has gained almost 25% during the period.
| YTD | One year |
| Wipro | 13.71% | 14.88% |
| TCS | 18.35% | 20.55% |
| Infosys | 3.12% | 4.26% |
| HCLTech | 42.71% | 43.57% |
| LTIMindtree | 41.20% | 39.57% |
| Nifty IT | 23.87% | 24.58% |
| As on Dec 18, 2023 |
Citi believes more intense furloughs are likely to have taken place in the October to December 2023 quarter of the fiscal, in the usual tech and banking, financial services and insurance (BFSI) verticals.
In the previous quarter, the net headcount at the tech services giant reduced by over 5,000 employees. The brokerage also said the company is not going to campus for hiring next year unless the demand environment changes.
The brokerage noted that discretionary spends are being scaled down and that a trend which implies end of the replenishment of large transformation is not occurring for now. It also pointed out that the firm’s consulting business, which contributes to 10-15% of the revenues, is also discretionary in nature.
Wipro ended the second quarter with 22 accounts above the $100M range and the large deal total contract value reached $1.3 billion — the highest in the nine quarters. Its total bookings stood at $3.8 billion, up by 6% year-on-year and large deal bookings were at $1.3 billion, up by 79.0% year-on-year. However, as the third quarter close nears, Citi said it is difficult to interpret a correlation between bookings.
The third quarter revenues are largely due to average duration and the uncertainty in discretionary spends, the brokerage said. Wipro's management had revised its revenue guidance for the current quarter at -3.5% to -1.5% in constant currency (CC) terms. In the December ended quarter, the IT services segment revenue stood at $2,713.3 million, down 2.3% quarter-on-quarter.
Contrary to Citi, Motilal Oswal had said improvement in large deal wins and quarterly deal total contact value (TCV) of $1 billion-plus indicate that Wipro's strategies are proving to be effective despite challenging macroeconomic conditions.
Wipro shares were trading 0.85% higher at Rs 450.25 on BSE at 10:20 am.
