Wipro share price dipped nearly 4 percent on Friday as brokerages stayed bearish on the IT stock even after it announced buying UK-based consultancy Capco for $1.45 billion. This is the software company's biggest acquisition so far.

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London-based Capco serves financial institutions across the Americas, Europe and Asia-Pacific regions, Wipro said in a stock exchange filing. Wipro said the acquisition will make it one of the largest end-to-end global consulting, technology and transformation service providers to the banking and financial services industry.

The stock fell as much as 3.9 percent to its day's low of Rs 421.30 per share on the BSE.

While market analysts largely termed the move as bold, most think that the integration could be tricky. The acquisition will strengthen Wipro’s position as a consulting and IT services provider to the BFSI sector and add 30 new large BFSI clients to Wipro.

"Wipro’s acquisition has definitely made the stock an exciting prospect –

where investors can see some definitive steps to correct its lagging growth trajectory. How many of those steps materialize into a positive impact on earnings and the stock, remains to be seen," brokerage firm Phillip Capital said in a report.

Meanwhile, Jefferies had an 'underperform' call on the stock and cut its target to Rs 380 per share from Rs 400 earlier. As per the brokerage, Capco may add $700 million to Wipro's revenue, however, its integration could be tricky. It added that Wipro will need a minimum of $41 million synergies to make the deal EPS accretive in year 3.

UBS said that the key positive is that the deal signals a more aggressive go-to-market approach for Wipro while execution of this strategy remains key. It is neutral on the stocks and sees balances risk-reward at current valuations.

(Edited by : Ajay Vaishnav)

First Published:Mar 5, 2021 12:11 PM IST