Wipro has been making good progress on many financial parameters over the last three quarters despite significant changes in leadership team, process, go-to-market and organisation structure and investment priorities, brokerage firm Sharekhan says. It maintains Buy rating on Wipro with a revised price target of Rs 610. 

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Wipro has taken speedy decisions on acquisitions to plug gaps in the portfolio, making dramatic changes in leadership, significant hires of external local leaders in certain markets and implementing a customer-first approach, it said.

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Over the last two quarters, Wipro has been able to report strong revenue growth, continued expansion in margins, acceleration in order book, strong revenue growth in top accounts and addition of clients across categories, Sharekhan said. 

Wipro’s free-cash-flow (FCF) increased 64% y-o-y to Rs 128.7 bn in FY2021 and Free Cash Flow to EBITDA increased to 85% from 63% in FY2020.
Wipro has consolidated several acquired entities (including 4C, Appirio, Healthplan Services, among others) into itself effective April 1, 2021. 
Wipro's management also highlighted that the organisational changes were behind now and the company has filled all key managerial positions. 

Wipro has acquired six companies across several markets over the last one-year including Capco, the largest ever acquisition in the history of the company. The combination of Capco’s consulting-led expertise and Wipro’s technology offerings would help the company to secure large-scale transformational deals in the financial services market, Sharekhan opines. 

Further, the company’s large deal focus, customer–centric approach, building mechanism to increase cross-team collaboration and setting up a team to win mega deal on a consistent basis has started showing results in terms of acceleration in closure of multi-year large deals (Metro AG, Telefonica Germany, etc) and a 16.7%/33% q-o-q/y-o-y growth in large deal win TCVs in Q4FY2021/H2FY2021. Out of 12 large deals during Q4FY2021, the company’s mega deal win in its American consumer business has the potential to reach $1 billion.

Further, Wipro’s management highlighted that there are more large deals in the pipeline compared to the last 6-9 months. Large deal wins, robust deal pipeline and new client addition are expected to boost the company's organic revenue growth in FY2022. 

Wipro Key Risks:

Rupee appreciation and/or adverse cross-currency movements
Constraint in local talent supply in US
Shortage of digital skilled talent