Information technology services major Wipro on Thursday reported its best fourth-quarter results in ten years and showed a strong deal win in the quarter helping the company guide for sequential revenue growth of 2-4 percent in Q1 of FY22 (and an 11-13 percent growth in the quarter year-on-year). Brokerages, however, have mixed views on the stock.

Brokerage firm CLSA has given an 'Underperform' rating for Wipro, It said the IT giant has shown strong margin defence, concentrated deal participation, and a positive outlook. CLSA has a price target of Rs 450 for the stock.

The brokerage report said the company's fourth-quarter 2021 results were impressive because of the margin management. It reported 3 percent quarter-on-quarter constant currency revenue growth, slightly ahead of CLSA estimate, and guided for 2-4 percent quarter-on-quarter growth in the first quarter of 2022.

CLSA expects to see a more distributed deal portfolio, as larger deals tend to be lumpy and make extrapolation difficult. Also, the company indicated its total order book in the second half of 2020 was US$7 billion (up 33 percent year-on-year).

Meanwhile, Nomura has raised the rating to 'Neutral' for Wipro, stating that the revenue growth of 3 percent is in line with the expectations and the margin A 90 basis points beat vs the brokerage firm estimates. Nomura has a price target of Rs 425 for the stock.

The brokerage notes say the revenue growth guidance of 2-4 percent is ahead of Nomura's expectations of 1-3 percent. Also, this was the second consecutive quarter of robust execution by the company. This reflects the benefits of the steps taken over the past 2-3 quarters. All these things position the company to close the revenue growth gaps with the peers. Nomura Forecast 18 percent revenue growth in the fiscal year 2022 Vs 14/16 percent TCS/Infosys.

Citi, on the other hand, upgraded the stock to 'buy', saying that Wipro has raised earnings before interest and tax (EBIT) estimates by 2-3 percent, and the earnings per share (EPS) changes of 1-2 percent were due to the higher tax rate assumptions. Citi has a price target of Rs 510 for the stock. Also, the brokerage firm notes that the current company valuations are at a 30/18 percent discount to TCS/Infosys.

Jefferies, however, has an "underperform" rating to Wipro. The brokerage firm said that the revenue and the margin are marginally ahead of the estimates. It has a price target of Rs 380 for the stock.

Jefferies also noted that the revenue growth was broad-based across the markets and verticals. The large deal bookings rose 16 percent quarter-on-quarter to $1.4 billion in the fourth quarter. Also, large deal ramp-ups and acquisitions should drive a 13 percent revenue compound annual growth rate (CAGR) over the fiscal year 2021-23. But wage hikes and acquisitions may keep the EPS growth low at 7 percent CAGR over the fiscal year 2021-23.

UBS gave a "neutral" rating with a price target of Rs 470. The brokerage firm stated that the company delivers the fourth-quarter revenue beat and the solid first quarter of the fiscal year 2022 guidance. This guidance is much better than the UBS estimate of -1 to +1 percent.

(Edited by : Pranati Deva)

First Published:Apr 16, 2021 1:42 PM IST