Share of Wipro rose over 3% in the early trade today despite the IT software company reporting a fall in Q1 revenue, EBIT and margins on a sequential basis. It also saw slowdown in growth areas like BFSI due to stress in capital markets and the European banking space. The IT-major recorded a disappointing revenue growth, contracting by nearly 2%, added with an unimpressive outlook for Q2.
Wipro stock opened lower, but gained momentum in the early trade and rose 3.52% to touch an intraday high of Rs 268.85, compared to Wednesday's closing price of Rs 259.70. The stock price of Wipro has risen 25% during last one year and 6% on an half yearly basis.
Wipro has moved above its 200-day simple moving average in today's trade, although it trades below than 30, 50 and 150-day moving average. The stock trades higher than 5 day moving average.
The IT major released first quarter earnings post market trading hours on Wednesday, stating, "The company had posted consolidated net profit of Rs 2,120.80 crore in the same quarter last year."
Consolidated net sales of the Bengaluru-based technology firm rose 5.28% y-o-y, revenue generated from IT services segment grew by 4.3% y-o-y. However, net sales were lower than the March quarter.
Commenting on Q1 earnings, Abidali Z. Neemuchwala, Wipro CEO and Executive Director said in a filing to the Bombay Stock Exchange, "Our efforts on client mining have resulted in an addition of three customers in more than $100 Mn bucket. We will continue to build differentiated capabilities to drive business transformation for our customers by investing in our big bets."
"We delivered IT Services margins of 18.4% and Free Cash Flows of 98.8% of our Net Income. We had a slower start to the year, we however remain focused on our operations and continue to invest in talent and capabilities for the future," said Jatin Dalal, Chief Financial Officer.
With subjecting Wipro's revenue guidance as 'unimpressive' of 0-2% QoQ in 2QFY20E that is largely in-line with expectations, given the low sequential base, Reliance Research quoted, "Downwardly revising our target PE multiple to 14x (from 15x earlier) to factor in slower revenue growth, we maintain our HOLD recommendation on the stock with a revised target price of Rs 270 (from Rs 300 earlier) ".
Jefferies & Credit Suisse maintains underperform rating, BNP Paribas maintains hold call on Wipro' s brokerage calls.
A total of 4.44 lakh and 105 lakh shares of Wipro are currently changing hands on BSE and NSE, respectively. Wipro stock is currently quoting at Rs 267.50 on BSE and Rs 267.90 on NSE.
Edited by Rupa Burman Roy