Wipro Ltd shares fell 3.5% on Wednesday, that is, on January 15, after the earnings of the IT company for the third quarter ended in December (Q3) did not meet the estimates, which He made analysts and stockbrokers cautious about the company’s prospects.
Wipro shares fell up to 4% in the intraday session and closed the day near its lowest point at Rs 248.20. The performance of the shares in the last year has been quite moderate, with a fall in the share price of 1.7% during the period compared to an increase of almost 14% in the Nifty 50 benchmark.
The company, after Tuesday’s market hours, said consolidated earnings fell 3.8% sequentially to Rs 2,455.9 crore for the quarter ending in December. However, total revenues grew 2.3% to Rs 15,470.5 rupees.
The company’s IT services revenues in dollar terms increased 2.2% sequentially to $ 2,094.8 million in the quarter ended December, while the constant growth in foreign exchange earnings stood at 1.8%.
After the announcement of earnings, global research firm Morgan Stanley awarded a “underweight” rating on Wipro shares, but raised the target price to Rs 240 per share from Rs 233 previously. He said the management comment indicates a stable demand environment, but with some macro uncertainties. He also stressed that some higher margins in the third quarter were favored by some reversals of provisions, and the company’s low performance with respect to its peers may continue.
Kotak Institutional Equities also advised investors to opt for the “Reduce” strategy in Wipro shares with an objective of Rs 265 per share. Third-quarter revenue growth was weak in all verticals, the brokerage firm said, adding that the orientation of sequential revenue growth of 0-2% by March 2020 is lower than its estimate.
Meanwhile, Credit Suisse was “neutral” in Wipro’s shares with an objective of 250 rupees each. He said the company’s third quarter earnings are largely in line with the estimates. Wipro reported a 40% increase in accounts of more than $ 100 million versus only 3% each for TCS / Infosys, he said, adding that the positive aspects also include a steady decline in attrition in the last two quarters.
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