Wipro Ltd shares fell 3.5% on Wednesday, i.e. 15 January, after the IT company’s earnings for the third quarter ended December (Q3) missed estimates, making analysts and brokerages cautious on the outlook of the firm.
Wipro shares fell as much as 4% in intra-day session and closed the day near its lowest point at Rs 248.20. The stock’s performance in the last one year has been quite muted, with the share price down 1.7% during the period compared with a nearly 14% rise in the benchmark Nifty 50 index.
The company, after market hours on Tuesday, said that consolidated profit was down 3.8% sequentially to Rs 2,455.9 crore for the quarter ended December. However, total revenue grew 2.3% to Rs 15,470.5 crore.
The company’s IT services revenue in dollar terms rose 2.2% sequentially to $2,094.8 million in quarter ended December, while constant currency revenue growth stood at 1.8%.
After the earnings announcement, global research firm Morgan Stanley gave an ‘underweight’ rating on the Wipro stock, but raised the target price to Rs 240 per share from Rs 233 earlier. It said the management commentary indicates stable demand environment, but with some macro uncertainties. It also highlighted that higher margins in Q3 was helped by some provision reversals, and the company’s underperformance to peers may continue.
Kotak Institutional Equities also advised investors to opt ‘Reduce’ strategy on Wipro shares with a target of Rs 265 per share. The Q3 revenue growth was weak across all verticals, the brokerage firm said, adding that the guidance of 0-2% sequential revenue growth for March 2020 is lower than its estimate.
Meanwhile, Credit Suisse was ‘neutral’ on Wipro shares with a target of Rs 250 apiece. It said that the company’s Q3 earnings are largely in-line with estimates. Wipro reported 40% increase in $100 million plus accounts versus only 3% each for TCS/ Infosys, it said, adding that the positives also include a steady decline in attrition over the last two quarters.
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