Pick of the week: Wipro

HDFC Sec | Jan. 28, 2019, 12:04 p.m.

Valuation

Wipro reported a strong quarter in Q3FY19, especially on the margin front. Further, with continued strength in BFSI and digital, a healthy deal pipeline commentary and client specific issues left behind, we are positive on Wipro’s growth trajectory. This, coupled with sustainability of higher margins in coming years could further boost profitability. Wipro’s ability to win and handle large scale projects globally and strong financial profile characterised by healthy operating accruals, sound cash position and comfortable debt coverage metrics also results in a positive view on the stock. We feel investors could buy the stock at the CMP, and add on dips to the Rs 319-322 band (13.5x FY21E EPS) for sequential targets of Rs 392 (16.5x FY21E EPS) and Rs 416 (17.5x FY21E EPS). At the CMP of Rs 353, the stock trades at 14.8x FY21E EPS.



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