New Delhi witnessed a surge in Wipro shares on Monday, nearing a 14% increase, which boosted the company’s market valuation by Rs 18,168.68 crore. This uptick came as a reaction to the company’s December quarter earnings surpassing estimates. On the BSE, the stock reached a 52-week high of Rs 526.45, marking a 13.10 percent rise, while on the NSE, shares rallied to Rs 529, hitting a 52-week peak with a 13.65 percent jump. Wipro led the pack among the Sensex and Nifty companies in early deals.
In the broader IT sector, Wipro wasn’t the only one basking in investor interest as other players like Tech Mahindra, Infosys, HCL Technologies, and Tata Consultancy Services also saw buying fervor. The BSE Information Technology index was nearly 2 percent up. Benchmark equity indices showcased record highs on this day of trading, with the Sensex crossing the 73,000 milestone and the Nifty soaring past 22,000, largely buoyed by the rallying IT stocks.
During the same period, Wipro shared its Q3 earnings, reporting a near 12 percent dip in consolidated net profit at Rs 2,694.2 crore against a backdrop of conservative investments from clients. Vikas Jain of Reliance Securities remarked that Wipro’s earnings were better-than-expected, contrasting with mixed results from competitors. While Wipro and Infosys saw declines in net profit, Tata Consultancy Services and HCL enjoyed profit growth. Despite a reduction in revenues of 1.7 percent in constant currency terms, Wipro’s Q3 FY24 performance hinted at a potential positive turning point. Its consolidated revenue from operations saw a 4.4 percent decrease to Rs 22,205.1 crore compared to the same quarter the previous year.
Following the earnings release, Wipro expressed an expectation of nearly flat revenue growth in the next quarter, indicating a tempered fiscal year growth outlook. Meanwhile, Wipro declared an interim dividend of Rs 1 per share, and on January 15, the company’s shares saw a 10 percent uplift, creating a 52-week high after its Q3 results. Wipro’s ADRs rallied nearly 18 percent to $6.35, a 20-month high, post-results.
Against the backdrop of four consecutive quarters of profit declines, analysts remain in a ‘wait and watch’ mode, with forecasts suggesting Wipro may continue to lag behind peers. The third quarter is generally seen as weak for IT firms due to fewer working days in the US and Europe. Wipro’s muted Q4 guidance and its struggle to convert deal wins to top-line growth were concerning factors among analysts.
For the third fiscal quarter ending in December 2023, Wipro secured deals totaling $0.9 billion and saw an order book at $3.8 billion, mirroring the previous quarter’s figures. Analysis from IDBI Capital recognized early signs of a return to growth in consulting. Analysts expect Wipro’s revenue growth to gain momentum over the period of FY24-FY26 with various improvement levers such as higher utilization, pyramid rationalization, the end of restructuring expenses, resources re-allocation, and a boost in consulting revenues.
Wipro’s future outlook was mixed as it attempted to align client-facing profiles and focus on strategic account mining. Nuvama Institutional Equities reiterated its ‘hold’ stance on Wipro shares with a target price of Rs 460. Other brokerages such as Morgan Stanley and Nomura held more cautious views, with Morgan Stanley maintaining an ‘Underweight’ rating and Nomura with a ‘Reduce’ stance, siting concerns over weak Q4 guidance and marginal improvement potential in margins for FY24.
Disclaimers by analysts emphasized these were personal views and advised users to consult with certified experts before making investment decisions, reflecting the mixed sentiments around Wipro’s performance. As investors digest the earnings report and analyst viewpoints, Wipro’s stock fluctuations continue to be a point of observation within the tech and financial sector.