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Wipro Ltd ADR WIT

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Morningstar’s Analysis

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Wipro Excels in Q2 With Key Verticals Firing on All Cylinders; Increasing FVE to INR 495

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

Narrow-moat Wipro posted solid results and even better guidance to close out its second fiscal quarter. The robust top-line growth, aided by continued organic and inorganic investments, was coupled with revenue guidance above our expectations for the upcoming quarter. In addition, we have upgraded Wipro’s cost of equity to a below-average rating from average. As a result, we are increasing our fair value estimate to INR 495/$6.60 per share from INR 350/$4.60 per share. With shares trading around INR 672 after results, we continue to view Wipro as overvalued. We consider other Indian IT services names Tata Consultancy and Infosys to be overvalued as well. IT services stocks have skyrocketed, with Wipro’s stock doubling in the last year alone. We think the pandemic has brought significant tailwinds to the industry, like accelerated digital demand, but that has come with headwinds, such as scarce labor. Also, we believe a substantial portion of the IT services market growing includes managed infrastructure from new workloads enabled by the cloud, which we think will favor cloud-service providers like Amazon and Microsoft.

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Company Profile

Business Description

Wipro is a leading global IT services provider, with 175,000 employees. Based in Bengaluru, the Indian IT services firm leverages its offshore outsourcing model to derive over half of its revenue (57%) from North America. The company offers traditional IT services offerings: consulting, managed services, and cloud infrastructure services as well as business process outsourcing as a service.

Sarjapur Road, Doddakannelli
Bangalore, KA, 560 035, India
T +91 8028440011
Sector Technology
Industry Information Technology Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Mar 31, 2022
Stock Type
Employees 221,365