Wipro shares deliver single-digit returns in 2024; buy, sell or hold?

Shares of Wipro have delivered single-digit returns in 2024. The IT stock which looked set to approach the Rs 600 mark  till the end of previous week has tumbled on its Q1 earnings. It touched its 52 week high of Rs 580 on July 19. However, the stock is trading near the Rs 500 mark in the current session, falling 9% intraday on July 22 after taking into account June 2024 quarter earnings of the IT major.

In the current session, the Wipro stock was trading on a flat note at Rs 503.85 against the previous close of Rs 500.55 on BSE.  Market cap of Wipro stood at Rs 2.63 lakh crore on BSE today. Total 2.51 lakh shares of the firm changed hands amounting to a turnover of Rs 12.66 crore on BSE.

Wipro shares have gained 25% in the last one year and risen 4.67% in 2024.

Compared to the 52-week high of Rs 580 on July 19, Wipro stock has declined 13.27% till date. 

On the index level too, the sentiment in the IT stocks has remained muted with the BSE IT index rising 14% this year.

During the last one year too, the index has risen 24.78% or 100 pts .Similarly, the Nifty IT index has risen 13% in 2024. The index has risen 34.19% in the last one year.

Brokerages don’t have a bullish stance on the stock in the long term.  In fact, they have a neutral or a bearish stance for the IT stock. Here's a look at what brokerages said on the prospects of the IT stock. 

Axis Securities said Q1 earnings miss estaimates on Revenue, EBITDA and PAT fronts except deal wins. It assigned  sell call to the IT stock with a price target of Rs 470.

"Wipro has lagged in its execution despite achieving better results and higher deal wins. However, FY25E may show some recovery backed by strong deal wins. Due to lacking the necessary visibility, we recommend a SELL rating on the stock," said Axis Securities.

Brokerage Nuvama has assigned a price target of Rs 557 to the stock.

"Wipro’s soft start to the year leaves much to be desired. While we do see signs of gradual improvements, especially in consulting, BFS and consumer, we believe the path to industry average growth is a long one. We continue to anticipate Wipro to underperform peers while its inexpensive valuation and high dividend yield limit the downside potential. Retain ‘HOLD/SN,” said Brokerage Nuvama.

Choice Broking is bearish on the IT stock.  It has assigned a REDUCE call with a revised target price of Rs 558.

 “Wipro has made substantial investments to strengthen its capabilities across the organisation. The investments in AI360 ecosystem, combined with the strategic value the consulting business brings to clients will help Wipro to stay competitive, resilient and a preferred partner for its clients. With significant upward stock movement over the last month, we downgrade our rating to REDUCE with a revised target price of INR558, implying a 22x PE on FY26E EPS of Rs 25.3,” said Choice Broking.

Brokerage Motilal Oswal has a neutral call on the IT stock. It has cut its price target by 10% to Rs 500.

"We expect the company to deliver FY24-26E IT Services revenue CAGR of 1.4%. We expect Wipro to clock 16% operating margin in FY25, which should translate into an 8.0% CAGR in INR PAT over FY24-26. We have cut our FY25E EPS by 1% and kept FY26E EPS broadly unchanged after its 1Q print. We reiterate our Neutral rating as we view the current valuation as fair. Our price target implies 20x FY26E EPS," said Motilal Oswal.