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Wipro Ltd ADR WIT

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Wipro’s Q1 a Standout, With Help From Capco Acquisition’s Outperformance; Increasing FVE to INR 350

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

Narrow-moat Wipro reported standout first-quarter results, as the company brought in top- and bottom-line results significantly above our expectations--due to organic and inorganic outperformance. The quarter marked the first full one since the Capco acquisition, which was the largest deal in Wipro’s history, at $1.45 billion. Coupled with the nice results was revenue guidance for the next quarter that surpassed our expectations. We are increasing our fair value estimate for Wipro to INR 350 ($4.60 for the U.S. ADRs) from INR 270 ($3.50) per share. With shares trading near INR 576 ($8.12) after results, we continue to view Wipro as significantly overvalued. As a reminder, we view other Indian IT services names Tata Consultancy and Infosys as significantly overvalued, as well.  IT services stocks have skyrocketed, with Wipro’s stock having doubled 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 significant 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 Jun 30, 2021
Fiscal Year End Mar 31, 2022
Stock Type
Employees 200,000


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