Wipro Q1 Results Review: Bearish Outlook To Continue As Q1 Earnings Miss Estimates

Wipro Ltd.'s earnings forecasts were slashed by brokerages' after its net profit in the first quarter of the current financial year missed the Street 's expectations and the company maintained a modest outlook for the second quarter.

The information technology major's broad-based revenue pressures, weak growth guidance for the second quarter and soft bookings suggest a weak growth outlook, according to Jefferies India Pvt. The brokerage cut its earnings-per-share estimates by up to 2% due to the revenue miss and expects an 8% compound annual growth rate in EPS over fiscal 2024–27E.

The uptick in growth seen by Tata Consultancy Services Ltd., Infosys Ltd. and LTIMindtree Ltd. may be specific to them rather than being a secular sector-wide trend, the note said.

The Bengaluru-based software services provider expects its revenue to either decrease by up to 1% or increase by up to 1% for the second quarter. Revenue from the IT services business segment is expected to be in the range of $2.6 billion and $2.65 billion in the July–September period.

Morgan Stanley trimmed its fiscal 2025–27 EPS estimates 2%, led by lower revenue-growth forecasts and expects Wipro to continue to lag peers on revenue growth in the near term.

Unlike peers, deal win numbers are not as encouraging, while the company-specific/portfolio-specific factors can remain a drag on overall revenue growth performance in the near term, Morgan Stanley said in a note. "Weaker than peer outlook and closing of valuation discount to peers keeps us on the sidelines until we see clear signs of improving secular demand momentum that can overcome challenges in parts of its business."

• The brokerage maintains 'sell' with a target price of Rs 495 per share, a downside of 11% from the previous close.

• Wipro delivered a weak first-quarter earnings.

• Wipro's growth and valuation differential versus peers stays.

• Wipro stock is over 27% since June factoring in a sharp recovery.

• No early signs of recovery seen though.

• Valuations at 29 times are high; remains cautious and selective.

• The brokerage maintains 'underweight' with a target price of Rs 459 per share, an 18% upside from the previous close.

• Expects Wipro to continue to lag behind peers on revenue growth in near term.

• Would keep its P/E multiple at a steep discount to peers.

• Sees early signs of recovery tailwinds.

• The company needs better execution.

• The brokerage maintains a 'neutral' rating with a target price of Rs 490 per share, a downside of 12% from the previous close.

• Earnings were weaker than expected.

• The second-quarter guidance was weaker than peers.

• The sharp miss is likely to drive a mean reversion post the year-to-date outperformance.

• The brokerage maintains 'underperform' with a revised target price of Rs 455 per share from Rs 400 apiece earlier. This implies a downside of 18% from the previous close.

• Profit was ahead due to higher other income.

• Cuts EPS estimates by up to 2%, given the revenue miss.

• Expects 8% EPS CAGR over FY24–27E.

• Growth pickup is likely to be gradual.