Wipro price targets: Inexpensive stock valuation, high dividend yield to limit downside

Wipro share price today: Wipro's Q4 results were largely in line with Street estimates. While the IT major is seen taking at least two quarters to revive -- near terms concerns are yet not over as per the management, its inexpensive stock valuations and high dividend may keep downside limited, analysts said.

Post its quarterly results, the Wipro management talked about persistent weak in demand environment and ongoing ramp-downs in existing books. A few small-sized engagements continue to hinder near-term growth for the company, analysts noted.

The new CEO Srinivas Pallia does not plan to revamp the organisational structure and prioritizes reviving growth in the near term, they said.

"The performance of Wipro under the new CEO will be keenly monitored by investors before any meaningful re-rating," Motilal Oswal Securities said while suggesting a target of Rs 490 on the stock.

Nirmal Bang said Pallia likely has a 3-year runway to deliver industry matching – if not industry-leading growth. Unlike Thierry who was lucky to start his stint when demand was strong, Srini comes during a time when demand is weak, it said.

This brokerage said while revenue guidance for Q1 indicated demand weakness, the range-bound margin guidance at 16 per cent is also not surprising as Wipro wants to reinvest in growth. Nirmal Bang has 'Sell' on the stock with a target of Rs 477, suggesting 7 per cent potential downside.

Nuvama said Wipro’s overall Q4FY24 performance and Q1FY25 guidance were in line with its expectations - that were quite modest to begin with. But it does see signs of gradual improvements, especially in the consulting and healthcare space.

"We believe the CEO transition shall further elongate the recovery path for Wipro, though it holds promise for the long run. We continue to anticipate Wipro to underperform peers while its inexpensive valuation and high dividend yield limit the downside potential," the brokerage said.

Religare Securities said Wipro has strong capabilities and a decent client base, but it would still need 1-2 quarters for a noticeable revival. This brokerage has an 'Accumulate' rating with a target price of Rs 513 on Wipro shares.

Dhruv Mudaraddi, Research Analyst at StoxBox said Wipro has yet again given a sequential guidance for revenue of -1.5 per cent to +0.5 per cent in CC terms, which makes him wary about the recovery of the company’s growth and the overall demand environment.

"The new CEO has in front of him a mountain of uncertainties which we expect won’t be easy to climb at least until Q2FY25 when we expect the discretionary spending to pick up. The outlook on client budgets in FY25, the consulting business, the ramp-up of old deals & new and large deal pipeline trajectory will be watched closely," he said.