Wipro hits highest level since March 2000; jumps 12% in seven days

The stock was up 2% at Rs 353, trading at its highest level since March 8, 2000, on the BSE.

Shares of Wipro hit a near two-decade high of Rs 353 apiece, gaining 2 per cent on the BSE, as analysts expect the  company to post better revenue growth in FY20 led by continued momentum in large deal wins, robust digital growth and continued growth in BFSI (banking, financial services and insurance) and other verticals. The stock of IT services firm was trading at its highest level since March 8, 2000.

In the past seven trading days, Wipro has outperformed the market by surging 12 per cent after the company on January 14, 2019, announced that its board will consider a proposal for issue of bonus shares. In comparison, the S&P BSE Sensex was up 1.6 per cent during the same period.

The board of directors of Wipro at their meeting held on January 18, has recommended issue of bonus equity shares in the proportion of 1:3 that is 1 bonus equity share of Rs 2 each for every 3 equity shares held in the company. The board also recommended an interim dividend of Rs 1 per equity share of par value Rs 2 each to the members of the Company as on Wednesday, January 30, 2019, being the record date.

Financial performance

Wipro reported 2.4 per cent quarter-on-quarter (QoQ) rise in revenue in constant currency (cc) terms led by strong growth in BFSI and consumer business unit. In rupee terms revenue was up 3.5 per cent at Rs 14,666 crore. Net profit grew at 35 per cent to Rs 2,544 crore on QoQ basis.

“We expect the growth in these three vertical to continue seeing spend and healthy deal pipeline. Also the management is confident of sustainable growth in all the three verticals going ahead. However healthcare which is facing challenges in last few quarters is likely to remain soft for foreseeable future as the company is seeing 10 per cent lower enrolment than last year,” analysts at Narnolia Financial Advisors said in result update.

"Also, the macro challenge (US and Brexit issue) which is playing around the industry will result in lower growth in Q4FY19. Even the management lowered its guidance for Q4FY19 (0 per cent to 2 per cent in cc terms vs 1 per cent to 3 per cent in last quarter). On margin, we have increased our margin for FY19 and FY20 seeing the margin beat Q3FY19. Even the management has stated though they will continued to invest but operational parameter will help to sustain the margins going forward," it added.

Analysts at Elara Capital have ‘buy’ rating on Wipro with a target price of Rs 435 per share.

“We reiterate Buy and reiterate Wipro as our second top pick among large-cap IT Services with estimates that continue to be significantly ahead of consensus. We continue to expect a rerating as Wipro has already narrowed the margin and growth gap with peers. Expecting the margin improvement to be sustainable and factoring better return metrics, we arrive at a new target price of Rs 435 from Rs 405 on 17x (earlier 16x) FY20 P/E,” the brokerage firm said in result update.

At 09:55 am; Wipro was trading 1.5 per cent higher at Rs 351 on the BSE, against 0.04 per cent decline in the benchmark index. A combined 2.71 million equity shares changed hands on the counter on the NSE and BSE so far.