Wipro Ltd's shares, which received an ex-bonus in the ratio of 1:1 last month, will go ex-dividend today. Following its December quarter results, the IT firm announced an interim dividend of Rs 6 per share. The IT major previously stated that the interim dividend would be paid on or before February 15, 2025.
Wipro declared a dividend of Rs 1 each in calendars 2024 and 2023, and Rs 6 in total in calendar 2022. Wipro shares fell 3.78 percent on Monday, but are up 17.47 percent over the last six months. Wipro's stock has historically traded at a discount to Tata Consultancy Services (TCS) Ltd and Infosys Ltd due to its lower growth and margin profile, consulting exposure, and lower dividend payout.
"We expect the pressure on revenue and earnings to ease slightly, given signs of recovery in its consulting business and optimism about the demand environment. Systematix Institutional Equities reiterated its SELL rating with a revised target price of Rs 252 (up from Rs 220 previously), based on 18 times FY27E EPS, earlier this month.
It views a significant increase in total contract value (TCV) and higher-than-expected earnings as key upside risks.
Wipro's Q3 revenue fell in the middle of the guidance given at the end of Q2. Revenue growth was higher in the United States but lower in other markets. To revive growth, the company is taking corrective actions in the APMEA and some European markets under new leadership.
"Margin performance continued to improve, driven by increased offshoring and fixed-price contracts. This performance could continue in the coming quarters. Deal wins were consistent but remained lower than the peak reached a few quarters ago - improvement here would help restore confidence in growth," said Elara Securities.
Wipro has historically underperformed due to frequent leadership exits, which appear to be behind it, but valuations are not comforting given the recent run-up in the stock price, Elara said, suggesting a target price of Rs 250 for the stock.
JM Financial stated that stable margins should allow Wipro to invest in growth as demand shifts.
"We were already targeting 17.5% margins for FY27, limiting incremental uplift. However, we see a higher upgrade to Street's conservative estimates. Our FY27E EPS is now approximately 15% higher than consensus. We continue to value the stock at 24 times 24-month forward EPS to reach our revised target of Rs 360. The recent correction in larger peers has narrowed the valuation gap, limiting re-rating potential," JM Financial stated.
