IT major Wipro has secured a 10-year mega deal worth $650 million (500 million British Pounds) deal with UK-based insurer Phoenix Group but the brokerage firms continue to remain dismal on it. They are citing Wipro's poor track record of false start and more mega deal wins for a solid turnaround of the company.
The project is designed to deliver life and pension business administration for the ReAssure business and accelerate Phoenix Group’s operational transformation, said Wipro in exchange filing. "Wipro’s existing FCA-regulated entity, Wipro Financial Outsourcing Services, will deliver comprehensive life and pension administration services to Phoenix Group’s ReAssure customers."
Shares of Wipro gained more than 2.35 per cent to Rs 273.60 during the trading session on Thursday, commanding a total market capitalization close to 2.85 lakh crore. The scrip had settled at Rs 267.25 in the previous trading session. Shares of Wipro are down 18 per cent from its 52-week high at Rs 324.55, while it has risen 25 per cent from its 52-week low at Rs 208.40.
Wipro announced a GBP 500 million 10-year deal with Phoenix Group. The deal is net-new and would start to ramp up gradually from 3QFY26E. The deal is notable since it marks Wipro’s entry into an account that has been a stronghold for TCS, said Kotak Institutional Equities.
This is the second mega deal over the past four quarters for Wipro and highlights the improvement in GTM and large deal focus under the current leadership. Wipro has had multiple false starts in the past and would need more of such wins to lend credibility to turnaround efforts, added Kotak but it has a 'sell' rating on the stock with a target price of Rs 265.
Most Indian IT companies indicated a potential increase in discretionary spending in the retail vertical in Q3FY25. However, retail, the second largest vertical for Indian IT, may experience delays in awarding discretionary projects due to the direct impact of recently announced policy changes around tariff, said Antique Stock Broking.
Wipro is seeing traction in its consumer vertical from vendor consolidation, which could drive future growth, said Antique. It recently won a deal with a leading American retail and distribution company, involving the transformation of merchandising, sales, and supply functions using an AI-led approach, it added with a 'hold' rating on Wipro with a target price of Rs 315.
Even though revenue growth was flat during the quarter. Its Ebitda margin increased, owing to better execution. Consistent growth of large deal-wins is expected to drive its long-term performance. It has a strong large deal pipeline, with significant traction in BFSI and energy, manufacturing and resources sector, said Geojit Financial Services earlier this month.
"However, the pace of technology spending may be tempered by economic challenges, including macro headwinds and the slowdown in the US technology sector. Hence, we downgraded our rating to 'reduce' on the stock, based on 18 times P/E on FY27E Adjusted EPS, with a rolled-forward target price of Rs 261," it added.
Among other brokerage firms, JM Financial has a 'buy' rating on the stock with a target price of Rs 360, while Sharekhan and IDBI Capital have a 'hold' tag for the counter with a target price of Rs 325 and Rs 299, respectively. KR Choksey has suggested to 'sell' the stock with a target price of 289.