Wipro shares fall 4 per cent on Q1 results, experts bullish

Wipro shares declined nearly 4 per cent on Friday after India's third largest software exporter reported a lower-than-estimates 4 per cent rise in net profit for the quarter ended June 30.

The Azim Premji-led company had on Thursday reported a consolidated net profit of Rs 2,187.70 crore in the April-June period against Rs 2,103.20 crore in the corresponding period a year ago. Gross sales of the company jumped 8.82 per cent year-on-year to Rs 12,237.60 crore.

During April-June period, Wipro's standalone net profit declined 3.82 per cent year-on-year to Rs 1,988.20 crore. The company posted bottom line of Rs 2,067.20 crore in the same quarter a year ago.

Shares of the IT major fell 3.73 per cent to Rs 566.45 on the Bombay Stock Exchange. A total of 1.77 lakh shares traded hands at the exchange.

Brokerage house Sharekhan maintained its hold rating on the stock with a target price of Rs 660.

According to its research report, Wipro's earnings performance still does not warrant a re-rating in the stock. "Owing to weakness in the energy and telecom spaces, it is unlikely to show material improvement in earnings on an organic basis in 2015-2016. At current levels, the stock trades at 15.6x and 13.6x its FY2016 and FY2017 earnings estimates, respectively."

"In terms of client additions, the company added 36 clients during the quarter and for the second quarter of 2015-16, the company expects revenues from IT Services business to be in the range of $1,821 mn-$1,857mn, implying a 1.5-3.5 per cent growth quarter on quarter, with expectations that the worst is over in the Energy, Natural Resources and Utilities domain and Healthcare, Life Sciences and Services expected to bounce back in the ongoing quarter. The share price of the company can touch Rs 753 in the ongoing quarter," Sarabjit Kour Nangra, vice president research- IT, Angel Broking, said. 

Meanwhile, the broader market closed the week nearly a per cent lower, with the BSE Sensex ending at 28,112.31 - down 258.53 points.