Wipro's share price has outperformed its peers in the last year — but analysts are still cautious about giving it a 'buy' rating
- Wipro’s share price is down more than 3.5% after the Indian IT services major announced its acquisition of London-based consultancy firm Capco.
- Analysts are wary that integrating the company may prove to be a challenge for Wipro in the near-term and long-term.
- So far, Wipro has been top performing IT stock compared to its peers over the last one year.
Even though Wipro has been the best performing IT stock on Nifty over the last one year, nearly doubling in value, analysts are still treading on the side of caution. And, its latest acquisition has just added to the street’s anxiety about the Indian IT services giant.
View all Offers
View all Offers
- 6% OFF
OnePlus 9 5G (Arctic Sky, 8GB RAM, 128GB Storage)₹ 46999₹ 49999Buy On
Redmi Note 10T 5G (Mint Green, 4GB RAM, 64GB Storage) | Dual5G | 90Hz Adaptive Refresh Rate | MediaTek Dimensity 700 7nm Processor₹ 14499₹ 18999Buy On
- 17% OFF
Samsung Galaxy M21 2021 Edition (Arctic Blue, 4GB RAM, 64GB Storage) | FHD+ sAMOLED | 6 Months Free Screen Replacement for Prime (SM-M215GLBDINS)₹ 11999₹ 14499Buy On
- 11% OFF
Samsung Galaxy Z Flip3 5G (Phantom Black, 8GB RAM, 256GB Storage) with No Cost EMI/Additional Exchange Offers₹ 84999₹ 95999Buy On
- 18% OFF
Redmi 9 Power (Mighty Black 4GB RAM 64GB Storage) - 6000mAh Battery |FHD+ Screen | 48MP Quad Camera | Alexa Hands-Free Capable₹ 11499₹ 13999Buy On
Source: Nifty IT
|Top 5 Indian IT services companies||% change in share price over the last 365 days|
Wipro’s rally in the last one year can be attributed to the switch in the company’s strategy after its new chief executive, Theirry Delaporte, came in. “While everything appears perfect on paper, we do realise the strategy is easier formulated than implemented,” said analyst firm Phillip Capital in its report dated November 2020.
Source: Respective reports
|Credit Suisse||Neutral||₹ 500|
|Motilal Oswal||Neutral||₹ 450|
|Morgan Stanley||Underweight||₹ 410|
|JP Morgan||Underweight||₹ 370|
AdvertisementWith the Capco deal, Wipro’s share price went for a dive after its largest ever acquisition worth $1.45 billion. “The execution risk is further aggravated by a weak growth performance from Capco over the last two years – even after adjusting for the drag due to COVID-19,” said Motilal Oswal in its report dated March 4. Its share price is down over 3.5% at 1:00 pm on March 5.
According to Nomura, even though the Wipro-Capco deal adds presence in the consulting businesses, it has typically been a less successful venture for Indian IT services companies.
The global brokerage is also wary that the valuation of the deal is a bit on the higher side and will impact margins in the long run since consulting requires heavy onsite presence. “Ongoing restructuring and investments would take a toll on margins in the near term, eating away at gains from operational efficiency. Even lower margins from acquiring Capco would further put pressure on the bottom line,” added Motilal Oswal.
The deal between Wipro and Capco is likely to be finalised by June 2021, subject to regulatory approvals.
Here’s why the BJP may be dilly-dallying on declaring the Metro Man as the Chief Minister candidate for Kerala
These are the world’s top food delivery companies – India’s Zomato and Swiggy have a long way to go as compared to their global counterparts like DoorDash or Meituan
Heranba Industries makes a bumper debut on stock exchanges — shares soar 44% over the issue price band
Popular on BI
- Nykaa IPO will open today — here is how to apply via bank and apps like Zerodha, Paytm Money
- A CryptoPunk NFT bought for $74 resurfaced after four years and just sold for $2 million
- Best DIY wallpapers to revamp your house
- India's largest car maker loses nearly two thirds of its profit to chip shortage
- New Range Rover: Check out expected price in India, features and other details