Sell Wipro shares, says Kotak as it awaits progress on turnaround journey

Kotak Institutional Equities has maintained its 'Sell' on Wipro Ltd, following its interaction with CEO Srini Pallia. Kotak said the focus of Wipro stays on organic growth, complimented by tuck-in or beach-head acquisitions. It said growth momentum in the US is picking up for Wipro, especially in healthcare, BFSI and hi-tech verticals and that a consistent execution across multiple quarters is the key priority of the Wipro management.

The domestic brokerage said it awaits progress on the turnaround journey. The turnaround, it said, needs to get multiple elements right and is challenging. "Narrowing the gap in growth rate with peers will be a good start. We retain our cautious stance on the stock. We value it at an unchanged 17X multiple on September 2026E earnings, leading to a fair value of Rs 460. Retain Sell," it said.

Kotak said the growth momentum is increasing in the US across verticals and that healthcare, BFSI and technology benefit more than CPG, E&U and manufacturing. 

"Wipro expects stability in APMEA, while Europe is work-in-progress. The company is prioritising focus areas in each vertical. For example, in life sciences, the focus is on clinical trials and pharmacovigilance. In BFS, the focus is on leading with Capco. The deal pipeline is improving. The focus is on deal conversion.

The Wipro CEO is focused on execution and driving profitable growth. The existing organisational structure will not be changed, Kotak said adding that the leadership and employees will continue to evolve with a mix of internal promotions and external hires. 

Kotak said Wipro is taking steps to improve delivery and sales excellence. The CEO tracks client-centricity metrics closely and is focused on driving an increase in the qualified pipeline. To improve the performance, Wipro is focused on getting a combination
of people, incentives, plans/processes, solutioning and pricing right, Kotak said.

Overall, Wipro's growth strategy involves: growing large accounts, with the focus on top 75 and further accounts with potential. 

Wipro will be more proactive in shaping deals; the focus is on cross-selling and upselling, defending the existing business and ensuring qualification for RFPs, Kotak said.

Wipro would keep looking to build industry and cross-industry solutions. These initiatives helped win large deals recently, Kotak noted.

Wipro is training employees in AI at multiple proficiency levels and the focus is on using AI in service delivery, creating AI-specific business streams, and ensuring responsible and secure use cases.