Wipro Share:
Wipro Limited, India’s fourth-largest IT services company, witnessed a notable surge in Wipro Share price on Friday, October 20, 2024, as the stock jumped over 5% during early trading. The rise came on the back of robust earnings for the second quarter of FY25 and the announcement of a 1:1 bonus share issue, which created a buzz among investors. Wipro’s share price soared by as much as 5.34%, reaching a high of ₹557.05 per share on the Bombay Stock Exchange (BSE).
Strong Q2 FY25 Performance Drives Investor Sentiment
Wipro reported an impressive set of numbers for the July-September quarter of FY25, boosting investor confidence. The company recorded IT services revenue of ₹22,196 crore, representing a 1.4% increase from ₹21,896.3 crore in the preceding quarter (Q1 FY25). In terms of USD revenue, the figure rose 1.3% sequentially to $2,660 million, up from $2,625.9 million in Q1 FY25.
Additionally, Wipro’s large deal bookings were a key highlight, growing by 28.8% quarter-on-quarter (QoQ) to $1.5 billion. This strong momentum in large deal wins indicates the company’s increasing traction in securing significant contracts in a highly competitive IT landscape.
Wipro also posted a solid improvement in profitability. The company’s IT services earnings before interest and taxes (EBIT) increased by 3.5% to ₹3,732 crore from ₹3,605.7 crore in Q1 FY25. The EBIT margin also saw an improvement, rising by 30 basis points (bps) to 16.8%, compared to 16.5% in the previous quarter.
Q3 Guidance and Bonus Share Issue Announcement
Despite the upbeat Q2 performance, Wipro’s guidance for the upcoming quarter (Q3 FY25) is conservative. The company expects IT services revenue to be in the range of $2,607 million to $2,660 million for the December quarter, translating to a sequential growth guidance of -2.0% to 0.0% in constant currency terms. This cautious outlook reflects potential headwinds related to weak seasonality in the IT sector, as noted by industry analysts.
In a major boost for shareholders, Wipro’s board of directors also approved a bonus share issue in the ratio of 1:1. This means that shareholders will receive one additional share for every existing share they hold. The bonus issue announcement has been welcomed by investors, as it typically enhances liquidity and signals management’s confidence in the company’s future growth prospects.
Analysts Weigh in on Wipro’s Q2 Performance and Outlook
Wipro’s second-quarter results have garnered positive reactions from brokerage firms and market analysts. Nomura, a leading global brokerage, stated that Wipro’s Q2 performance exceeded expectations across all key parameters. The strong deal win momentum, reflected in the 28.8% QoQ growth in large deals, was a standout feature of the company’s quarterly performance. Nomura maintained a ‘Buy’ rating on Wipro, with a target price of ₹680 per share, signaling optimism about the company’s long-term growth trajectory.
On the other hand, brokerage firm Antique Stock Broking struck a more cautious tone, noting that while Wipro delivered a strong Q2, the company’s Q3 revenue guidance reflects a muted outlook. According to the brokerage, Wipro has underperformed its larger peers, such as Infosys and HCL Technologies, over the past five to six quarters, mainly due to a sharper-than-expected decline in its consulting and discretionary spending businesses. Although the company hinted at a gradual improvement in its overall business environment, the guidance for the next quarter suggests that growth may remain subdued in the near term.
Antique Stock Broking maintained a ‘Hold’ rating on Wipro’s shares, with a target price of ₹575 apiece. The brokerage reduced its revenue forecast by 1%-2% for FY26 and FY27, while also lowering its earnings per share (EPS) estimates by 2%-3%. Despite the near-term challenges, analysts expect Wipro to maintain stable margins, even in the face of wage hikes in the coming months.
Stock Market Reaction and Expert Recommendations
At 9:45 am on Friday, Wipro’s shares were trading 4.39% higher at ₹552 per share on the BSE, reflecting strong investor enthusiasm following the earnings report and bonus issue announcement. The sharp rise in Wipro’s stock price highlights the market’s positive sentiment toward the company’s strong financial performance and attractive shareholder rewards.
While some analysts remain cautious about Wipro’s near-term growth prospects due to weak Q3 guidance, the long-term outlook remains positive for many. With large deal bookings on the rise and profitability improving, Wipro is well-positioned to capture growth opportunities in the IT services sector.
Wipro’s Q2 FY25 earnings report has not only reassured investors about the company’s operational performance but also sparked excitement with the announcement of a 1:1 bonus share issue. The company’s steady growth in revenue, improved margins, and robust deal bookings are positive indicators, though its cautious guidance for Q3 suggests that short-term growth may face challenges due to seasonality.
Despite this, the long-term outlook for Wipro remains promising, with analysts like Nomura maintaining a ‘Buy’ rating and a higher target price of ₹680 per share. Investors looking for stable returns may find Wipro an attractive option, particularly given the company’s strong financials and commitment to rewarding shareholders through the bonus issue.
As Wipro continues to navigate the competitive and dynamic IT services landscape, its ability to sustain margin growth and win large deals will be critical factors in driving future stock performance. Investors are advised to keep an eye on the company’s progress in the coming quarters, especially its performance in Q3 FY25 and beyond.
Disclaimer:
The views and recommendations made above are those of individual analysts or broking companies, and not of Newztips. We advise investors to check with certified experts before making any investment decisions.
