Wipro shares slip after $375 million Harman DTS deal; JM Financial sees 28% upside

Shares of Wipro Ltd slipped 1 per cent in Friday’s trade after the IT major announcing an agreement to acquire the Digital Transformation Solutions (DTS) business unit of Harman International, a Samsung company, in a deal valued at $375 million.

The stock fell 0.76 per cent to touch the day’s low of Rs 248.05 on the BSE, against its previous close of Rs 249.95. At 9:47 am, the scrip was trading 0.54 per cent lower at Rs 248.60.

In an exchange filing on Thursday, Wipro said the acquisition will expand its engineering research and development (ER&D) capabilities, particularly in AI-powered digital engineering, device engineering, and design-to-manufacturing across sectors such as technology, industrial, aerospace, healthcare, and consumer industries.

As part of the transaction, more than 5,600 DTS employees, including key leadership, across the Americas, Europe and Asia will transition to Wipro. Subject to regulatory approvals, the deal is expected to close by December 31, 2025, the company added.

Brokerage JM Financial termed the acquisition an “opportune” one for Wipro and maintained a ‘Buy’ rating with a target price of Rs 320, nearly 28 per cent upside from the current price of Rs 248.60.

JM Financial said the $375-million deal, including earn-outs, values the transaction at 1.2x CY24 sales of $315 million. The acquisition, it noted, positions Wipro as the ninth-largest ER&D service provider globally, underlining the large and underpenetrated outsourcing opportunity in the space.

“DTS’ strength in hi-tech and life sciences aligns with Wipro’s, enabling easier cross-sell,” JM Financial said. While it has not yet factored in the numbers pending details on margins, the brokerage estimates a 50-60 basis points EBIT margin impact, primarily from a lower margin profile, required investments, and incremental amortisation.

The EPS impact is expected to be marginal (around 1 per cent), it added, highlighting that the purchase consideration represents just about 6 per cent of Wipro’s cash on books, thereby not affecting future payout or buyback plans.

“Welcoming DTS into the Wipro family marks a pivotal step in our transformation journey,” said Srini Pallia, CEO and Managing Director of Wipro Limited. “Their specialized engineering expertise, combined with Wipro’s consulting-led, AI-powered capabilities, will significantly enhance the value we deliver to clients.”

Srikumar Rao, Managing Partner and Global Head of Engineering at Wipro, said the move will strengthen Wipro’s software-defined, platform-centric approach and enable it to deliver “larger, more complex transformation programs across high-growth sectors.”

Harman CEO Christian Sobottka said the agreement would unlock DTS’ next growth chapter.