Shares of IT major Wipro have slipped 45%, emerging as top losers among the IT giants this year. Wipro stock which closed at Rs 715.20 on December 31, 2021 is trading at Rs 396.40 in the current session. On the other hand, Infosys stock has lost 18% and shares of TCS have tumbled just 11.71% in 2022. During the same period, Sensex has gained 5.37% or 3,178 points and Nifty has added 5.28% or 930 points.
However, mirroring a major correction in the IT stocks, the BSE IT index has fallen 22.15% or 8,383 points to 29,461 this year. During the last one year too, the index has lost 16.60% or 5863 points.
Similarly, the Nifty IT index has defied the rally in benchmark indices and corrected 24.14% or 9,343 points in 2022. The index has declined 18.43% or 6623 points in the last one year.
Wipro stock hit its 52-week low of Rs 372.40 on October 17, 2022. Till date, it has recovered Rs 24 or 6.6% from its yearly low.
Analysts have attributed the fall in IT stocks especially Wipro to the ongoing Russia- Ukraine war, the economic slowdown and the Covid-19 lockdowns across the globe, which impacted the international business of the Indian IT firms during the period.
In the current trading session, Wipro shares 1.66% lower at Rs 397 against the previous close of Rs 403.70. The IT stock has been falling for the last four sessions. Wipro shares have declined 38.31% in the last one year. Market cap of Wipro fell to Rs 2.17 lakh crore on BSE today.
Also Read: Infosys vs TCS vs Wipro: Which stock is Nomura’s top IT sector pick?
Here’s look at what approach investors can take while trading in Wipro stock.
Nomura has assigned a neutral rating on Wipro with a target of Rs 425. The target price amounts to 4% upside from the market price of Rs 407 on December 2.
Nomura in a report dated December 2 said ,” We lower revenue growth forecasts for FY24-25F; maintain Neutral for Wipro We lower our FY24-25F USD revenue growth by 50-120 bps to 7.2-8.1% y-y, leading to 1-5% earnings cuts for FY23-25F. We roll forward valuation to FY25F (from FY24F) and hence, our target price rises to Rs 425, set at an unchanged 17x FY25F EPS of Rs 25. Wipro currently trades at 16.3x FY25F EPS. We maintain Neutral on Wipro and prefer Infosys.”
Abhijeet from Tips2trade said, “Strong sell-off in global IT stocks due to inflationary environment thereby creating a recession in the global economy has also led to a sharp fall in Indian IT stocks including Wipro. Currently, Rs 406 is a strong resistance on the daily charts. Investors should wait for lower levels close to Rs 380-385 to buy for near term targets of 406-416 in the coming days.”
In Q2 of the current fiscal, Wipro reported a 9.27 per cent year-on-year (YoY) fall in net profit at Rs 2,659 crore compared with Rs 2,930.70 crore in the corresponding quarter last year.
Revenues for the quarter rose 14.60 per cent YoY to Rs 22,539.70 crore from Rs 19,667.40 crore in the same quarter last year. Dollar revenues for the IT Services stood at $2,797.70 million, up 2.3 per cent sequentially. Revenue growth in constant currency (CC) terms stood at 4.1 per cent sequentially.
Hem Securities has initiated coverage on Wipro with a buy rating considering its Q2 earnings.
It has assigned a target of Rs 467, 15% higher to the current market price of Rs 406.
In a report dated December 7, Hem Securities said, “Robust demand environment and healthy deal pipeline would drive Wipro’s next phase of growth. We believe the company will perform well over next few quarters due to strong deal win momentum. Also, the confident commentary from management, moderating attrition rate and supply side challenges are positive triggers in the stock. We initiate a “BUY” rating on the stock and value the stock at 15.4 times FY24E earnings to arrive at the target of Rs 467.”
