Wipro stock trading at 48% discount from all-time high
Indian major IT stocks have been reeling under pressure, owing to recession concerns in key economies, ongoing rate hikes by major central banks, slowdown in deal wins and lacklustre earnings. In the past one year, majority of the large cap stocks in this space have underperformed compared to the broader markets. Notably, Wipro‘s stock underperformed significantly when compared to its industry peers.
From its September 2023 high of ₹443.75 apiece, the stock has tumbled 14% to trade at the current level of ₹382. Moreover, it has plummeted by 48.36% from its all-time high of ₹739.85 apiece, achieved in January 2021. In CY23, the stock had only one month- April- with a gain of over 5%. Currently, it is trading 7.6% away from its five-month low of ₹355.
On October 18, the company reported another set of weak numbers for the September quarter (Q2FY24) and provided weak revenue growth guidance, lower than the street estimates. The company posted a consolidated net profit of ₹2,667 crore in Q2FY24, which stood flat compared to a net profit of ₹2,649.1 crore in the year-ago quarter. However, the net profit decreased by 7.55% sequentially.
Its consolidated revenue from operations dropped marginally to ₹22,515 crore from ₹22,539 crore recorded in the September 2022 quarter. The IT segment revenue fell by 2.3% QoQ to ₹22,396 crore.
For Q3FY23, the company expects revenue from its IT services business segment to be in the range of $2,617 million to $2,672 million. This translates to sequential guidance of 3.5% to -1.5% in constant currency terms.
Also Read: Q2 results review: Major players report soft earnings; what’s the road ahead for IT sector?
On the positive side, total bookings stood at $3.8 billion, up 7% YoY in CC, and large-deal TCV stood at $1.3 billion, up 79% YoY in CC.
Atul Parakh, CEO of Bigul, said that Wipro’s recent subpar performance in recent quarters has significantly impacted market expectations. The company’s projection of a decline in Q3FY24 constant currency IT revenue, ranging from 3.5 to 1.5% sequentially, particularly in the BFSI vertical, has dented investor sentiment.
“This trend is evident in the stock price. The upcoming earnings in the next quarter are pivotal, and many in the market are keenly watching. I believe we’ll witness earnings bottoming out in Q4FY24, signalling potential growth in the IT sector,” he added.
From a technical perspective, Atul Parakh said that the stock’s pattern of lower highs and lows on weekly charts indicates inherent weakness. Presently, all major short- and medium-term moving averages are above the stock’s market price, suggesting strong resistance.
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He pointed out that the 350-370 bracket will act as a critical support and accumulation area, aligning with three-year lows, while the 440-450 range seems poised to serve as a formidable resistance, he added.
Rajesh Bhosale, Equity technical and Derivative analyst at Angel One, said “The stock of Wipro has seen a vertical fall in the last couple of weeks. The indicators are oversold, and hence we are seeing a bounce back in today’s session. This bounce may extend in the near term, with the next immediate resistance around 390–395; however, we are not seeing any major outperformance, and hence traders can keep light on this counter. The immediate support for the stock is around 370.”
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 30 Oct 2023, 04:49 PM IST
