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Wipro shares give up Rs 400 mark post Q2 earnings, what should investors do?

Wipro shares give up Rs 400 mark post Q2 earnings, what should investors do?

Wipro stock tumbled 6.01 per cent to Rs 383.25 against the previous close of Rs 407.75 on BSE. Market cap of Wipro fell to Rs 2.11 lakh crore.

Wipro stock tumbled 6.01 per cent to Rs 383.25 against the previous close of Rs 407.75 on BSE. Wipro stock tumbled 6.01 per cent to Rs 383.25 against the previous close of Rs 407.75 on BSE.

Shares of IT major Wipro below the Rs 400 mark today after the IT firm gave out a weak 3QFY23 revenue growth guidance during its Q2 earnings. A 9 per cent fall in the September quarter profit also dented investor sentiment. Net profit fell to Rs 2,659 crore in the September quarter compared with Rs 2,930.70 crore in the corresponding quarter last year.  Subsequently, Wipro stock tumbled 6.01 per cent to Rs 383.25 against the previous close of Rs 407.75 on BSE. Wipro shares have lost 48 per cent from their 52-week high in comparison to the current market price.

At 10:17 am, the stock was trading 5.59 per cent lower at Rs 384.95 on BSE. 

ALSO READ: Wipro shares slip 6% after September quarter profit falls 9%

Market cap of Wipro fell to Rs 2.11 lakh crore. A total of 6.06 lakh shares of the firm changed hands, amounting to a turnover of Rs 23.41 crore on BSE. The stock has declined 43 per cent in a year and lost 46 per cent in 2022. 

Financial services firm Motilal Oswal said, "Its 3QFY23 USD constant currency revenue growth guidance of 0.5-2% QoQ was disappointing and missed our estimate by 50bp.  We were disappointed by weak 3QFY23 revenue growth guidance. While the management blamed this on macro uncertainty and geopolitical issues, it said that it has started to see a slowdown in the Consulting business, although the same was partially compensated by cross-selling in services."

The brokerage has given a neutral call on the stock with a target price of Rs 380, 7 per cent lower to the previous closing price. ALSO READ: Wipro Q2 results: Net profit drops 9% to Rs 2,659 cr

YES Securities has changed its rating on the stock from ADD to NEUTRAL with revised target price of Rs 446 per share. 

"The IT firm reported mixed financial performance for the quarter. While, the revenue growth was inline, EBIT margin came in below estimates. The sequential growth was broadbased across all verticals with cc growth at 4.1 per cent QoQ. The INR reported growth was supported by depreciation of INR by 3.4% QoQ vs USD. There was sequential decline in EBIT margin(down 38bps QoQ) led by wage hike in the quarter and other supply side constraints. There was slight moderation in employee attrition as LTM attrition was down 30 bps QoQ to 23 per cent, " the brokerage said.

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Abishek Jadon, smallcase manager and VP - Windmill Capital said, "The IT sector has been out of favor of market participants for the last few quarters due to global uncertainty around sustenance of revenue growth. With TCS result announcement, we observe a quarter result better than street expectations in terms of revenue growth.  For Wipro, though the topline met street expectations but bottomline was sharply below expectations. Worsening attrition numbers, weaker growth especially in UK & Europe, and softened deal environment indicate an uncertain future ahead for the sector. Keeping Infosys track record and management expectations in mind, we won't be surprised if Infosys comes with better or similar numbers as TCS."

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Published on: Oct 13, 2022, 10:39 AM IST
Posted by: Aseem Thapliyal, Oct 13, 2022, 10:28 AM IST