Wipro shares recover 40% from October lows, is the upside capped?

Shares of IT major Wipro Ltd have surged 40% from their October 2023 low. The IT stock, which stood at Rs 378.35 on October 26 last year, hit a high of Rs 529.30 in the current session. However, shares of Wipro are still down 28.40% from their record high of Rs 739.84 reached on October 14, 2021.

Wipro shares have gained 33% in a year and risen 10% this year.

The PE ratio of Wipro stands at 24.28 against the sectoral PE of 37.16. The PE ratio of its peers such as Infosys, TCS and HCL Tech stands at 28.23, 32.47 and 28.72 respectively.

The stock has a one-year beta of 0.7, indicating very low volatility during the period.

In the current session, the Wipro stock rose over 1% to a high of Rs 527.90 on BSE. Market cap of Wipro climbed to Rs 2.75 lakh crore on BSE. Total 0.35 lakh shares of the firm changed hands amounting to a turnover of Rs 1.81 crore on BSE.

The stock rallied today after the IT firm won a new deal with US chipmaker, Intel Foundry. The deal with the chip development division of Intel will allow Wipro engineers work on Intel’s latest ‘18A’ chip node that will be used in cutting-edge consumer electronics devices next year onward.

In terms of technicals, the relative strength index (RSI) of Wipro stands at 62.5, signaling the stock is neither oversold nor overbought. The IT stock is trading higher than the 10 day, 20 day, 50 day, 100 day, 150 day and 200 day moving averages.

Centrum Broking has initiated coverage on the stock with a Reduce rating.

"The near-term demand environment remains challenging with clients being cautious about the macro environment resulting in longer deal conversion cycle. Consulting business is witnessing certain green shoots. Deals wins remain strong and provide strong visibility for medium term. We estimate revenue CAGR of 7.6% over FY23-26E with average EBIT margin of 15.5%. We initiate coverage with REDUCE Rating on the stock with target price of Rs 519/share at 19.0x on FY26E EPS. The stock trades at PER of 23.2x/19.9x on FY25E/FY26E EPS," said the brokerage.

Another brokerage Kotak Equities has given a Reduce rating on the stock.

“Management provided the hope of green shoots in discretionary demand, pointing to double-digit qoq growth in the consulting practice. However, a yoy decline in total contract value (TCV) and guidance of a revenue decline at the mid-point for 4QFY24 do not reflect a quick demand recovery. EPS estimates are largely unchanged. Retain fair value of Rs 430 and REDUCE,” said Kotak Equities.

Financial services firm Motilal Oswal has a neutral rating on the Wipro stock.

“We have kept our FY24-FY26 EPS estimates broadly unchanged after its 3Q print. We maintain our Neutral stance as we view the current valuation as fair,” said the brokerage.

Abhijeet from Tips2trades said, "Wipro is sideways to bearish on the Daily charts with strong resistance at Rs 546. A daily close below support of Rs 518 could lead to a target of Rs 483 in the near term."

Disclaimer: Business Today provides stock market news for informational purposes only and that should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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