MUMBAI: Wipro Ltd on Thursday hit ₹4 trillion in market capitalisation after its shares surged following the IT major’s better than expected earnings for the September quarter. Several brokerages have raised their target price for the company’s stock after the earnings.
It is the third IT company and the 13th listed Indian firm to have achieved ₹4 trillion in market capitalisation.
Shares of Wipro hit a record high of ₹739.90 apiece on Thursday. At 1pm, the stock traded at ₹730 on the BSE, up 8.4% from its previous close.
Only 12 Indian listed firms, including Reliance Industries Ltd, Tata Consultancy Services, HDFC Bank, Hindustan Unilever Ltd, Infosys, HDFC Ltd, ICICI Bank, Bajaj Finance, ITC, Kotak Mahindra Bank, Bharti Airtel Ltd had so far breached the ₹4 trillion market cap mark.
Wipro on Wednesday reported a 19% increase in net profit to ₹2,931 crore for the September ended quarter, as revenue grew 30% annually to ₹19,667 crore on the back of volume-led growth across markets and business lines. Its revenue in dollar terms grew 8.1% sequentially in constant currency to $2.58 billion, surpassing the $10-billion milestone of annualized revenue run rate.
Wipro, which only provides a forecast for the quarter ahead, said it expects revenue growth in the December quarter to be in the range of 2-4%, driven by an improving demand environment, especially for digital transformation-related services.
“This suggests that Wipro will start exhibiting the usual industry seasonality , contrary to its history ( wherein sequential growth rates were always higher for the company in 2H V/s 1H). Wipro also is stepping up the fresher level hiring , similar to peers and suggests that the pipeline remains robust and the initiatives around account management are beginning to show results in improvement on client metrics”, said JM Financial in a note to its investors.
Its commentary continues to be positive in the verticals such as BFSI, hi-tech media, life sciences, and communications. The retail vertical is expected to recover slowly across geographies in the near term. Operating cash flow was at ₹1,879 crore. IT services hiring remained strong with a closing headcount at 2,21,365 to ensure timely delivery.
“Over the years, Wipro has proactively built a resilient business structure. With multiple long-term contracts with the world’s leading brands, depreciation in INR, lower travel cost, and lower on-site expenses, EBITDA margins are likely to expand in the near term,” said Axis Capital in a note to its investors.
The brokerage firm has recommend a buy rating on the stock, assigning a 28 times P/E multiple to Wipro’s FY24E earnings of ₹27.7/share to arrive at a target price of ₹655 a share, implying an upside of 15% from current market price.
Wipro signed nine large deals, with total contract value of $580 million in the second quarter of the fiscal. Management indicated that 18% growth in deal TCV wins in first half (ACV – 29%) and robust deal pipeline across markets with a good mix of small and large deals give good revenue visibility.
Brokerage firm BoB Capital Markets has upgraded the stock to buy and increased its target price by 25% to ₹840 a share. Motial Oswal has raised its target price to ₹710, up 6%.
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