Why Wipro Share Price is Rising

Last week, IT majors Infosys and TCS released their Q3 results, broadly meeting both revenue and EPS estimates.

Even though Infosys had a muted quarter, the stock rallied around 9% last Friday in intraday trade following the earnings.

9% in a single day for Infosys is a mean feat... there's a common saying in the market that goes like 'elephants can't dance', elephants being the bluechip stocks which are known to not move much. But Infosys share price is known to have such big moves during its earnings announcement.

Even though Infosys Q3 report card did not have anything extraordinary, investors believed that no negative is still good news for IT companies.

Both, Infosys and TCS' management commentaries were not as gloomy as experts were projecting.

Similarly, like Infosys, Wipro share price saw a sharp movement in early trade today following its Q3 earnings release over the weekend.

In the past 1 month, the stock has rallied over 12%. Let's find out why Wipro share price is rising and what the forecast looks like for IT companies in the coming quarters.

Wipro Q3 Results in-line with Estimates

In early trade on 15 January 2024, Wipro shares spiked 10% to hit a high of Rs 526.

This was on the cards as the company's December quarter earnings beat street estimates, sending its American Depository Receipts (ADRs) up over 18% to hit a near-20-month high of US$6.35 on 12 January 2024.

The key highlight of the Q3 report card was Wipro logging over 20% year-on-year growth in large deal wins.

Despite Q3 being a weak one for IT companies, Wipro managed to continue with its deal booking. In the December 2023 quarter, Wipro's total deal wins stood at US$3.8 billion.

Meanwhile, the company also said that there has been a phenomenal recovery in the company's consulting business-Capco, which Wipro acquired in 2021.

Nevertheless, despite Wipro reporting the fourth consecutive fall in profits, optimism filled management commentary on higher deal wins aided sentiment.

The company's net profit fell 12% YoY while revenue fell 4% YoY to Rs 222.1 bn. The subdued performance was due to continued weakness in Wipro's BFSI vertical along with its exposure to consulting.

For the quarter, Wipro declared an interim dividend of Rs 1 per share.

The IT company's attrition rate continued to moderate, coming in at a 10-quarter low of 12.3% in December 2023.

What Next?

Going forward, industry experts are projecting demand to remain challenging owing to the evolving macroeconomic situation especially in the US and Europe.

For Wipro, its strong deal pipeline could possibly convert into order books and give Wipro an edge over its peers.

The company has guided for -1.5% to 0.5% sequential growth in its IT services business revenue. This translates to a revenue of US$2.6 bn to US$2.7 bn in the March 2024 quarter.

With no vague surprises in Q3 report card of major IT companies, the sentiment has now turned positive for IT companies.

It remains to be seen how Wipro translates the strong deal booking momentum to its advantage. If this cautious demand environment does turn soon, Wipro could see even higher deal booking in the coming quarter as client do away with their conservative spending.

How Wipro Share Price has Performed Recently

Following the sharp spike in its ADRs over the weekend, Wipro shares gained 10% today to hit a new 52-week high.

Shares of the company gave up some gains and are currently trading 7% higher at Rs 497.

With today's rise, the company's marketcap saw jumped over Rs 180 bn to Rs 2,612 bn.

Wipro has a 52-week high of Rs 526 touched today and a 52-week low of Rs 352 touched on 17 April 2023.

In the past one year, shares of the company have moved up by 25%.

Here's a table comparing Wipro with its peers -

Comparative Analysis

Company	Wipro	Infosys	LTI Mindtree	HCL Tech
ROE (%)	16.1	32.3	29.2	23.4
ROCE (%)	18.2	44.6	38.3	29.7
Latest EPS (Rs)	21.6	58.8	149.5	57.9
TTM PE (x)	20.8	27.2	41.3	26.4
TTM Price to book (x)	3.3	7.6	10.1	5.9
Dividend yield (%)	0.2	2.1	1.0	3.2
Industry PE	31.3
Industry PB	8.3

Data Source: Ace Equity

About Wipro

Wipro is one of the leading global IT, consulting and business process services companies.

Wipro was incorporated in 1945 as Western India Vegetables Product Limited. It was a consumer care product manufacturer till 1980 after which it diversified into the IT services business.

With effect from 1 April 2012, the company demerged its other divisions (consumer care and lighting, medical equipment, and infrastructure engineering) into a separate company called Wipro Enterprises Limited (WEL).

Wipro's operations can be broadly classified into IT Services, IT Products, and India State Run Enterprise.

For more details about the company, you can have a look at Wipro Company fact sheet and Wipro quarterly results on our website.

For a sector overview, you can read our IT sector report.

You can also compare Wipro with its peers on our website:

Wipro vs TCS

Wipro vs Infosys

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...