Wipro shares tank 4% after Q2 results; time to buy, sell or hold?

Shares of Wipro Ltd fell sharply in Thursday's trade as the IT firm reported a drop in its second-quarter profit. The stock dived 4.25 per cent to hit a day low of Rs 390.10 over its previous close of Rs 407.40. Wipro saw a 0.48 per cent dip in its Q2 FY24 profit, at Rs 2,646.3 crore, year-on-year (YoY), from Rs 2,659 crore in the year-ago period. The Bengaluru-based company's consolidated revenue from operations declined 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.

In addition, Wipro forecast third-quarter (Q3 FY24) IT services revenue may drop 3.5 per cent to 1.5 per cent, sequentially, on a constant currency basis. Further, the IT services firm said it has decided to merge five of its wholly-owned subsidiaries. The five wholly owned subsidiaries are Wipro HR Services India Pvt Ltd, Wipro Overseas IT Services, Wipro Technology Product Services (formerly known as Encore Theme Technologies), Wipro Trademarks Holding and Wipro VLSI Design Services India.

Wipro's employee count fell to 244,707 during the quarter, from 249,758 at the end of previous quarter.

On technical setup, support on the counter could be seen at Rs 385-380 levels.

Rajesh Palviya, Head of Technical Research at Axis Securities, said the stock is looking bearish. "Rs 398-400 is a critical juncture on the higher side until the scrip again manages to hold these mentioned levels on a closing basis. On the downside, if may fall towards Rs 385-380 in the coming trading session, which is a major support area," Palviya told BT TV.

Abhishek Jain, Head of Research at Arihant Capital, opined that the current weakness could be an opportunity for investors. "The stock may come to Rs 380-370 levels but this stock is on our radar. On a two-year horizon, it could be a good time to enter. Europe recovery will play a key part in Wipro's revival process," Jain stated during an interaction with BT TV.

The counter was trading lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150- and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 33.46. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 22.28 against a price-to-book (P/B) value of 3.39.

The scrip has an analyst target price of Rs 404, Trendlyne data showed, suggesting a potential upside of 2 per cent in a year. It has a one-year beta of 1.12, indicating high volatility on the counter.

(Disclaimer: Business Today provides stock market news for informational purposes only and 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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