Synopsis: Wipro's Q1 FY25 earnings disappointed, leading to an 8% stock drop. Analysts maintain 'Sell' ratings, adjusting target prices. Management forecasts flat IT services revenue growth for the next quarter.
Wipro's Q1 FY25 financial performance has left investors disheartened, leading to a nearly 8% decline in its share price, which dropped to Rs.513.25. The company's revenue decreased by 1.1% quarter-on-quarter, with varied performance across sectors.
In response to the underwhelming results, several brokerage firms have maintained their 'Sell' ratings but adjusted their target prices. Nomura raised its target price to Rs.600 per share, while Citi increased its target price to Rs.495 per share, up from Rs.455.
The management has forecasted flat IT services revenue growth for the quarter ending in September, with expected revenue between $2.60 billion and $2.65 billion. This translates to a sequential growth range of -1.0% to +1.0% in constant currency terms, adding to the cautious outlook for the upcoming quarters.
The decline in Wipro's stock price followed its announcement of Q1FY25 results, which failed to meet investor expectations. The company reported a net profit of Rs.16,175 crore for the June quarter, a 2% drop from the preceding January-March quarter of FY24. Net interest income (NII) also rose marginally by 2.6% sequentially to Rs.29,837 crore from Rs.29,078 crore in the previous quarter.
Brokerage firms have reacted to Wipro's disappointing performance by adjusting their forecasts. Nomura, while maintaining a 'Sell' rating, raised its target price to Rs.600 per share. Citi also maintained its 'Sell' rating but increased its target price to Rs.495 per share, up from Rs.455. Morgan Stanley similarly adjusted its expectations, reflecting a cautious stance on the stock's near-term prospects.
Wipro's management has projected IT services revenue growth for the September-ending quarter to remain flat, estimating revenue between $2.60 billion and $2.65 billion. This guidance translates to a sequential growth range of -1.0% to +1.0% in constant currency terms, indicating limited optimism for significant improvement in the immediate future.
The decline in Wipro's share price underscores investor concerns about the company's ability to meet growth expectations amid a challenging business environment. The varied performance across sectors and the cautious revenue forecast for the upcoming quarter contribute to the overall sentiment of uncertainty surrounding the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies. Investors are advised to check with certified experts before taking any investment decisions.
