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Can Wipro shares stage rebound after falling 45% in 2022?

Can Wipro shares stage rebound after falling 45% in 2022?

Wipro's revenue growth guidance for the March quarter, commentary on 2023 IT budget and demand trends in key verticals would be keenly followed going ahead

Wipro may report a 2.3 per cent YoY rise in net profit at Rs 3,037.80 crore for the December quarter on a 15.5 per cent YoY drop in net sales at Rs 23,468 crore, said Emkay Global Wipro may report a 2.3 per cent YoY rise in net profit at Rs 3,037.80 crore for the December quarter on a 15.5 per cent YoY drop in net sales at Rs 23,468 crore, said Emkay Global

Wipro ended as the worst Nifty performer in 2022. As per publicly available data with Trendlyne, a total of 13 brokerages have 'Hold' ratings on the stock; 12 have 'Sell' calls and six others having ‘Strong Sell’ calls. On the other hand, five brokerages have 'Strong Buy' calls with four others having 'Buy' calls.  The average target on the stock stands at Rs 459.15, which suggests a 16.91 per cent potential upside ahead.

The IT major is scheduled to report its December quarter earnings on January 13.

Investors would be eyeing Wipro's revenue growth guidance for the March quarter, commentary on 2023 IT budget and also demand trends in key verticals like BFSI, consumer, manufacturing, healthcare, and E&U. Besides, they would keenly follow the margin outlook, pricing environment and attrition rates. 

Emkay Global expects the IT firm to report a 2.3 per cent YoY rise in net profit at Rs 3,037.80 crore for the December quarter on a 15.5 per cent YoY drop in net sales at Rs 23,468 crore. Ebitda margin is seen falling to 19.2 per cent from 20.6 per cent YoY. The IT firm is seen guiding for 1-3 per cent CC QoQ revenue growth for Q4FY23.

This brokerage finds the stock Rs 470 worthy and has a 'Buy' rating on the stock.

On the technical charts, said Independent Analyst Manish Shah, Wipro is trading at the lower end of the price range and that the stock has not performed in line with overall markets. He noted that IT sector was not a performer in 2022 and Wipro was no exception.

"In last six months, the Wipro stock moved in Rs 418-375 range and currently the price is just reversing from the lower end of the range. There are subtle indications that the stock is bottoming out. Volumes are showing a contraction on declines, which means that selling is drying out," Shah said.

Shah said the RSI is showing positive divergence, which means momentum on the downside is waning.

"For positional traders, who are not too worried about day to day fluctuations, Wipro could be a good bet. On upside a rally can be expected towards the Rs 410. If the scrip sees the breakout, it will mean a major reversal signal and a possible upmove towards Rs 450. Accumulate this stock for as a long term and an investment buy," Shah said.

Wipro was the worst performer in the IT pack this past year. Tech Mahindra fell 43 per cent in 2022, HCL Technologies was down 21.11 per cent, HCL Technologies declined 20.28 per cent while TCS was down 13 per cent for the year.

BP Equities in a 2023 outlook note said The IT sector has gone through a lot of pain in 2022 on the back of higher operating costs, especially on the employee side due to a rise in attrition rates. Moreover, the uncertain business environment in the US and Europe played a spoilsport, it said adding that things look relatively better heading into 2023.

In a December note, Nomura said Wipro's higher exposure to consulting, due to the recent acquisitions of Capcoand Rizing, poses risk to improvement in its growth outlook in FY24F, which it expects to decelerate from 8.7 per cent in FY23 to 7.2 per cent in FY24.

Elara Securities has a 'Reduce' rating on the stock with a targets of Rs 460.

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Published on: Jan 02, 2023, 8:40 AM IST
Posted by: Priya Raghuvanshi, Jan 02, 2023, 8:37 AM IST
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