Equity analysts have given a thumbs up to the demerger scheme of India's third-largest software maker Wipro Ltd.
The Bangalore-based firm today said it will separate its non-core consumer care, medical diagnostics and infrastructure businesses into a separate entity and focus on its mainstay information technology business.
Terming it a 'fair demerger', domestic brokerage Edelweiss the move is a positive for existing shareholders. “In FY11-12, the IT business had contributed 86 per cent to revenue and 94 per cent to operating profit. We believe, that the non-IT business has been valued at 26 times FY12 EBIT, a fair deal for investors. Further, this will also enable the promoter to reduce stake (which any way he would have had to by 2013 to abide with SEBI regulations),” said an Edelweiss report.
Another domestic broking firm Nirmal Bang upgraded the Wipro stock to 'hold' from 'sell'.
We believe these steps taken by Wipro are positive for its shareholders, enabling them to earn a decent return on their investments in non-IT businesses. It will also enable Wipro to have a greater focus on its IT business,” it said in a report.
Nirmal Bang also revised its price target on the stock to Rs 392 from Rs 321 previously.
Shares of Wipro today closed Rs 10.60, or 3 per cent, higher at Rs 361.4 per share on the Bombay Stock Exchange.
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