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    Wipro shares may see 10% upside as moderating attrition should improve margin: CLSA

    Wipro shares may see 10% upside as moderating attrition should improve margin: CLSA

    Wipro shares may see 10% upside as moderating attrition should improve margin: CLSA
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    By CNBCTV18.com  IST (Published)

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    Brokerage firm CLSA has given Wipro's stock an outperform call as the tech giant’s management is confident in meeting its revenue guidance for the July to September quarter.

    Wipro shares advanced on Thursday as the domestic market shrugged off weakness across global markets after the US inflation reading.
    Brokerage firm CLSA has given the stock an outperform call as the tech giant’s management is confident in meeting its revenue guidance for the July to September quarter.
    Wipro shares rose over a percent in early deals and were trading at Rs 417.75, up 0.36 percent higher from the previous close, at 9:36 am. The stock has erased nearly 42 percent of investors’ wealth in 2022 (year-to-date) as against the benchmark Sensex which has risen more than 2 percent during the period.
    CLSA, however, sees a 10.5 percent upside in the IT stock from its closing price of Rs 416.25 on Wednesday.
    "It (Wipro) exuded confidence in meeting its 3 percent-5 percent revenue growth guidance for 2QFY23 and double-digit revenue growth in FY23,” the brokerage said.
    According to the brokerage, there are no signs of a demand slowdown though it is more normalised than 2021 and Wipro’s deal pipeline remains at an all-time high. The project flow is normal for the company’s consulting business, it said.
    Moreover, employee attrition — a concern for all major tech firms for the past several quarters — has started to moderate though it is still above comfort levels, CLSA said. This should help improve its margin over Q2-Q4 despite annual wage hikes, it added.
    Wipro is also tightening working capital to improve free cash flow after the quarter-on-quarter decline in the first quarter of the fiscal, but a buyback is unlikely, at least in the near-term, given a reduced overall cash balance, the brokerage noted.
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