Wipro shares down 47% from record high; what should investors do?

Shares of Wipro Ltd have declined 47% from their all-time high in nearly two years. The IT stock hit an all-time high of Rs 726.70 on January 3, 2022. Wipro stock closed on a flat note at Rs 382.05 in the previous session, falling 47.42% from record high during the period.

On the other hand, Wipro stock has turned flat in the last one year and on a year-to date-basis. The stock is down 2.81% in 2023 and fallen just 0.64% in a year. It has logged a maximum decline of 43% in two years.

The stock is oversold on technical charts with its relative strength index (RSI) at 26.9. It has remained highly volatile in one year with a beta of 1.1. Shares of Wipro are trading lower than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages signaling the stock is trading in a bearish zone.

In the last session, Wipro shares, which are the cheapest in terms of market price among the three IT behemoths, ended at Rs 382.05 against the previous close of Rs 383.05 on BSE. Wipro stock touched an intraday low of Rs 381.25. Market cap of Wipro stood at to Rs 1.99 lakh crore on BSE. Total 1.38 lakh shares of the firm changed hands amounting to a turnover of Rs 5.31 crore on BSE.

Nuvama Institutional Equities has cut its target on the stock to Rs 390 from Rs 400 earlier post Q2 earnings.

Wipro’s muted Q2 performance and disappointing Q3 guidance reaffirm its troubles with converting deal wins into growth.

"The decline in H1 (and Q3 guidance) translates to Wipro reporting YoY decline for FY24 – significantly below peers. We continue to expect Wipro to underperform peers, primarily due to its intriguingly low correlation between deal-wins and top line growth. The stock’s inexpensive valuation and high dividend yield should limit downside potential in the medium-term," it said.

Nomura India has reduced its target price on Wipro by 5 per cent to Rs 400 as it cut EPS estimates for Wipro by 3-6 per cent. Nomura India's FY24-26 EPS projections are 8-12 per cent lower than the Street estimates.

Nirmal Bang Institutional Equities has cut its target for the Wipro stock to Rs 353 from Rs 358 earlier.

Wipro will likely clock a dollar revenue decline of 4.5 per cent in FY24, which the brokerage said would be the weakest among its Indian peers. Wipro's higher exposure to consulting (through Capco and Rizing) may likely been one of the factors, the brokerage said.

Wipro reported lower than expected earnings in the second quarter of this fiscal. It logged a marginal drop in its second-quarter profit for the financial year 2023-24. The IT firm reported a 0.48 per cent fall in its Q2 FY24 profit at Rs 2,646.3 crore (year-on-year) from Rs 2,659 crore in the year-ago period.

The IT firm’s consolidated revenue from operations fell 0.1 per cent to Rs 22,516 crore for the three months to September 30 from Rs 22,540 crore in the corresponding period last year.

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