Brokerage firm CLSA on Thursday reiterated a ‘Sell’ rating on Wipro with an unchanged price target of Rs 220 per share due to its growth and execution challenges. Weak Q1FY20 guidance of -1.4 percent to 0.6 percent QoQ suggests growth challenges will persist for the company, CLSA said.

“Q4 revenue growth was in-line with expectations. The growth was led by consumer (5 percent constant currency QoQ), healthcare (2 percent) and the US (3 percent) while it was dragged down by technology (down 2 percent), communication (down 1 percent) and Europe (down 3 percent),” CLSA added.

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The company’s margin declined despite the benefit from higher utilisation and automation as its margin was impacted by wage hikes, higher D&A (depreciation, amortisation), forex headwinds and sharp expansion of ISRE (Indian State Run Enterprises Services Sector) losses, the brokerage firm said.

CLSA also stated that the digital revenue grew 6.4 percent QoQ to 35 percent of total revenue, however, barely 6 percent overall growth suggests sharp erosion elsewhere. "Growth outside of its top accounts in BFSI (banking, financial services and insurance ) and consumer remains a challenge," it said.

Therefore, the brokerage expects it to remain at the bottom of the peer growth range in FY20. Expensive multiples and weak growth make the stock unattractive at current levels, CLSA said.

During Q4FY19, the company reported a 38.4 percent year-on-year (YoY) jump in net profit at Rs 2,493.9 crore. Its revenue increased 8.9 percent to Rs 15,006.3 crore from Rs 13,768.6 crore in the year-ago period. The board approved Rs 10,500 crore buyback of 32.31 crore shares at Rs 325 per share.