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Business News/ Markets / Stock Markets/  Wipro share price jumps 13% to 52-week high post Q3 results; Nifty IT up 2.5%
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Wipro share price jumps 13% to 52-week high post Q3 results; Nifty IT up 2.5%

Shares of Wipro surged 13 percent in intra-day deals today to hit a fresh 52-week high of ₹526.45 as the company's December quarter earnings beat estimates even though it reported a decline in its net profit for the December quarter (Q3FY24).

Shares of Wipro surged 13 percent in intra-day deals today to hit a fresh 52-week high of ₹526.45 as the company's December quarter earnings beat estimates even though it reported a decline in its net profit for the December quarter (Q3FY24).Premium
Shares of Wipro surged 13 percent in intra-day deals today to hit a fresh 52-week high of 526.45 as the company's December quarter earnings beat estimates even though it reported a decline in its net profit for the December quarter (Q3FY24).

Shares of Wipro surged 13 percent in intra-day deals today to hit a fresh 52-week high of 526.45 as the company's December quarter earnings beat estimates even though it reported a decline in its net profit for the December quarter (Q3FY24).

This also comes after the company's American Depository Receipts (ADRs) surged almost 18 percent to hit a near-20-month high of $6.35 after the company reported its results on January 12.

Wipro's net profit fell 12 percent year-on-year (YoY) and 1.2 percent sequentially to 2,694 crore. The company's profit in Q2FY24 was 2,667.3 crore and in Q3FY23 was at 3,065 crore.

Read here: Wipro Q3 result: Revenue from operations, profit decline YoY, announces dividend - 10 key highlights

This is the fourth consecutive quarter where Wipro has reported a decline in profits on a YoY basis and market experts expect this underperformance to continue.

Its consolidated revenue from operations declined 4.4 percent YoY and 1.4 percent QoQ to 22,205.1 crore. In the same quarter last year, Wipro's revenue was 23,229 crore while in Q2FY24, the IT firm's revenue was 22,515.9 crore. In constant currency, revenue dropped by 1.7 percent QoQ and 6.9 percent YoY.

Meanwhile, it reported a 1.8 percent quarter-on-quarter (QoQ) increase in its net income to 2,690 crore ($323.9 million) for the third quarter of the current financial year (Q3FY24).

Read here: HCL Tech will keep hiring to meet 5.5% growth guidance, says CEO Vijayakumar

Wipro expects revenue from its IT services business segment to be in the range of $2,615 million to $2,669 million for Q4FY24. This translates to sequential guidance of -1.5 percent to +0.5 percent in constant currency terms.

In Q3 FY24, Wipro's total bookings came in at $3.8 billion in constant currency, marking a slight 0.2 percent QoQ increase but reflecting a notable 13.5 percent YoY decline. Large deal bookings stood at $0.9 billion in Q3 FY24, showing an 8.3 percent YoY decrease.

“In a seasonally soft quarter, deal booking momentum remained strong. Our large deals recorded a 20 percent year-to-date growth. Further, we are starting to see early signs of a return to growth in consulting, as demonstrated by the double-digit growth in order bookings in our Capco business," said Thierry Delaporte, CEO and Managing Director of Wipro.

Read here: Wipro vs HCL Tech Q3 earnings: 5 most important comparisons you should know

Following the 13 percent surge in Wipro as well as the better-than-expected results of other IT peers including Infosys, TCS and HCL Tech, the entire Nifty IT index jumped over 2.5 percent in intraday deals on Monday. Wipro was the top performer followed by Tech Mahindra, which advanced over 7 percent to its 52-week high of 1,401.50. Meanwhile, HCL Tech also rose 5 percent to its record high of 1,617.65.

TCS and Infosys also hit their respective 52-week highs on Monday, up 2 percent and 3.2 percent, respectively.

Post the results, brokerage house Axis Securities has retained its 'sell' call on Wipro with a target price of 450m implying a 14 percent downside.

"Wipro has lagged in its execution despite having better results and better deal wins. However, FY25E may show some recovery backed by strong deal wins. For lacking the necessary visibility, we recommend a SELL rating on the stock," said the brokerage. However, from a long-term perspective, the brokerage believes Wipro has a strong deal pipeline and superior financial structure. However, it lags in execution capabilities to capitalize on growth as compared to peers. Moreover, rising concerns over the prospects of large economies along with prevailing supply-side constraints pose uncertainties over the company’s short-term growth rates, it noted.

Meanwhile, HDFC Securities has a reduce call on Wipro with a target price of 450.

"Wipro (WPRO) delivered in-line revenue and margin performance and guided an improved trajectory for Q4. Notwithstanding the flat revenue guide for Q4 (-1.5% QoQ to +0.5% QoQ), its trajectory is ‘recovering’ after a 6 percent drop in the quarterly revenue rate over the past three quarters. Despite improved commentary on consulting business (bookings improvement in Capco), WPRO’s growth markers remain stressed such as (1) deal market-share loss to peers, (2) broad-based decline within verticals, and (3) steep decline in T5 accounts + risks of spend rationalization by large client," stated the brokerage.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 15 Jan 2024, 10:13 AM IST
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