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Wipro falls by up to 4.6% post Q4 earnings, brokerages bearish on stock

Wipro falls by up to 4.6% post Q4 earnings, brokerages bearish on stock

Reflecting the disappointment arising from earnings, the stock opened at 277 level today and hit an intra day high of 281.70 and intra day low of 274.10 on BSE. The stock hit its 52-week high of 334.75 on February 16, 2018 and yearly low of 244.33 on April 27, 2017.

The Wipro stock fell by up to 4.6% on Thursday a day after the IT firm reported its Q4 earnings, which came below expectations. The fall is the biggest daily percentage loss since September 14, 2017. At 12:53 pm today, the stock was down 2.12% or 6 points to 281 level on BSE. The firm whose earnings were announced after market hours saw its stock closing yesterday at Rs 287.20 level on BSE. Shares in the IT firm have fallen over 11 percent so far in 2018.

 

Reflecting the disappointment arising from earnings, the stock opened at 277 level today and hit an intra day high of 281.70 and intra day low of 274.10 on BSE. The stock hit its 52-week high of 334.75 on February 16, 2018 and yearly low of 244.33 on April 27, 2017.

Nomura has cut its target price for the Wipro stock to Rs 260 from Rs 270 after its Q4 earnings. Brokerage CLSA has given a sell rating on the stock with price target cut to Rs 260 from previous target of Rs 275. FY19-20 revenue estimates were reduced by 4% and margin by 80-110 bps. The firm does not see recovery to peer growth rates in foreseeable future.

 

Investec too has maintained a hold position over the stock and cut its target price to 290 from 304. The valuations are likely to be subdued versus peers and client specific issues continue to haunt, while margins are likely to improve in the current financial year, the brokerage said.


On Wednesday, the Bengaluru based firm announced a 20.3 per cent fall in its net profit at Rs 1,800.8 crore for March quarter against Rs 2,267 crore consolidated net profit last year. The company registered a 6.7 per cent decline in its net profit of Rs 1,930.1 crore on sequential basis, which was impacted by lower revenue from the company's operations.

 

Analysts had hoped Q4 net profit to come at Rs 2, 132 crore.

The company's gross revenue increased 0.7 per cent sequentially to $2.1 billion, while the IT services segment revenue in dollar terms was $2,062 million, up 2.4 per cent sequentially and 5.5 per cent YoY. "IT services margin for the quarter was 14.4 per cent. Excluding the impact of insolvency of a customer and the impairment loss in one of our acquisitions, IT services margin for the quarter was 16 per cent," the company said in a statement.

In comparison, country's largest software services exporter TCS reported a 4.48 per cent year-on-year (YoY) rise in consolidated net profit at Rs 6,904 crore for the March quarter on April 19. The board recommended a 1:1 bonus share issue.

Revenue growth came at 8.2 per cent (YoY). Its FY18 Q4 revenue was at Rs 32,075 crore. TCS' commentary that despite the blip in retail, it should grow in double-digits in FY19 led to positive sentiment around the stock.

The stock rose to its lifetime high level of 3557, clocking more than 10 percent gains in two sessions and becoming the first Indian IT firm to hit the $100 bn mark in market capitalisation.

Infosys whose earnings marked the beginning of Q4 earnings season reported a 2.4 per cent rise in its fourth-quarter net profit to Rs 3,960 crore on April 13 (Friday). However, the company's net profit on a quarterly basis fell 28.1 per cent. The IT services behemoth had reported a net profit of Rs 5,129 crore in the December quarter and Rs 3,603 crore in the corresponding quarter last year.

The revenue of India's second-largest software services firm increased 5.6 per cent to Rs 18,083 crore. The company said its revenues from digital offerings stood at $2.79 billion (25.5 per cent of total revenues) for FY18.

The Infosys stock fell up to 6% a day after the firm reported its Q4 earnings. Infosys announced a conservative EBITA margin guidance of 22-24 percent for FY 19 (versus 24.3 percent in FY18), which analysts said spooked the market.