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Wipro shares gain over 3% after $700-million deal with German wholesaler Metro AG

Updated : December 23, 2020 09:59 AM IST

The estimated deal value for the duration of the first 5 years is approximately $700 million.

Global brokerage Macquarie is of the view that the deal is an important step towards improving Wipro’s revenue growth rates in Europe.

The share price of Wipro gained over 3 percent in the early trade on Wednesday after the company announced a significant strategic digital and IT partnership deal with German wholesaler METRO AG.

The estimated deal value for the duration of the first 5 years is approximately $700 million. With the intention to extend up to 4 additional years, it can be a potential spend of up to $1 billion.

As a part of this transaction, Wipro will take over the IT units of METRO AG — METRO-NOM GMBH in Germany and METRO Systems Romania S.R.L. Through this partnership, more than 1,300 employees across Germany, Romania and India will transfer to Wipro, the company said in a regulatory filing.

Wipro will deliver a complete technology, engineering and solutions transformation program for METRO as it positions itself as a Wholesale 360-degree provider in the hotel, restaurant and catering food industry fuelled by quality, focus and flexibility, it added.

Wipro’s transformation program will encompass cloud, data center services, workplace and network services, along with application development and operations to provide an integrated, flexible and robust digital infrastructure to help drive METRO’s transformation agenda.

Global brokerage Macquarie is of the view that the deal is an important step towards improving Wipro’s revenue growth rates in Europe.

Macquarie maintained an 'Outperform' rating with a target of Rs 416 per share.

Kotak Institutional Equities noted that the company has been silently participating and winning large deals. The brokerage forecasts CC revenue growth of 7.7 percent in FY22 with scope for upsides.

It maintained an 'Add' rating with a target of Rs 380 per share.

Additionally, Wipro also announced that its Rs 9,500-crore share buyback offer will open on December 29 and close on January 11.

Wipro’s shares rallied as much as 3.7 percent to Rs 377.50 apiece on the BSE. At 9:45 am, the shares were trading 2.88 percent higher at Rs 374.50 as compared to a 0.28 percent gain on the benchmark Sensex.

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