Kotak Institutional Equities has downgraded Wipro Ltd. to ‘sell,’ citing significant underperformance compared to peers in recent years. Wipro’s growth has lagged behind, and the stock is trading at a substantial multiple of 21 times the earnings-per-share estimates for fiscal year 2026, which the brokerage deems unattractive.
The target price has been revised downward from Rs 430 to Rs 440, indicating a potential downside of 16% from the current price. The underperformance trend has persisted during the current CEO’s tenure, with brief improvements in fiscal years 2021 and 2022 offset by declines in subsequent years.
Kotak Institutional Equities highlights various challenges faced by Wipro, both internal and external. Elevated attrition in key management personnel is viewed as a concerning sign, particularly in the later stages of turnaround efforts. Mega deal announcements have been subdued, and the company’s significant exposure to the consulting portfolio, which previously worked against it, may only provide limited benefits in the case of a recovery.
The brokerage suggests that Wipro is vulnerable to share losses in vendor consolidation events on a net basis. It anticipates a modest 3.6% compound annual growth rate in dollar revenue for fiscal years 2024–26. In summary, Kotak Institutional Equities paints a cautious outlook for Wipro, emphasizing the unattractive risk-reward profile and the multitude of challenges that could impede the company’s growth prospects.
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