Wipro outshines TCS, Infosys and others with a 31% jump in share price over the last two months
- Indian IT behemoth Wipro touched the ₹3 lakh crore market cap milestone on June 3.
- Thursday’s high comes after the company announced its new partnership with Finastra, a fintech giant that serves 90 of the top 100 banks globally.
- With Wipro focusing on the banking sector, the company’s stock has rallied by over 31% with TCS, Infosys, HCL Tech and Tech Mahindra showing muted share price movement in the last two months.
Wipro’s share price has rallied by over 31% since April 1, whereas the stocks of other IT companies — Tata Consultancy Services (TCS), Infosys, HCL Tech and Tech Mahindra — have, more or less, stagnated. Among top five IT players in India, HCL Tech was the worst performing with its share price dipping by nearly 6%.
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Source: Compiled using BSE data
|Company||Increase in share price since 1 April 2021|
Wipro is expected to bring in more revenue than its peers this year
In the fourth quarter, Wipro net profit grew by 27% as compared to the same three months the year before. This was the company’s best result in nearly a decade. The last time it delivered double-digit growth in its quarterly net profit was in FY16.
Barring Wipro, most IT companies have seen muted share price movement since the results of the previous financial year came out.
However, all five of the top IT companies in India are bullish about their prospects in the ongoing financial year. Riding the wave of outsourcing and cloud adoption, IT players are aiming for double-digit revenue growth.
|Company||Revenue guidance (in constant currency terms)||Operating margin guidance|
|TCS||Does not issue guidance||Does not issue guidance|
|HCL Tech||Double-digit growth||19-21%|
|Tech Mahindra||Double-digit growth in enterprise, and single digit growth in telecom||Less than 15%|
With its focus on growing the banking, financial services and insurance segment (BFSI), expected recovery in manufacturing, and lead in healthcare, analysts predict that Wipro will deliver higher revenue growth than its peers over the next two years.
Wipro management disclosed they don’t see overall spending coming down anytime soon, during the fourth-quarter earnings call. Cloud solutions account for 25% to 30% of Wipro’s revenue and it is growing much faster than the average growth of the company.
What is driving Wipro’s share price rally?
Wipro has seen a flurry of activity this week. The jump in Wipro’s share price comes after the IT giant announced its new partnership with Finastra — a fintech giant that serves 90 of top 100 banks globally — to help its client banks with their digital transformation.
AdvertisementWipro said that the new partnership is focused on its clients in the Asia-Pacific region. This includes India’s largest public sector bank — the State Bank of India (SBI) — and ING Australia, the fourth biggest bank on the island nation.
The company also sold its entire stake in Denim Group, a application security firm, for a consideration of $22.42 million. That’s triple what Wipro paid for its 33.33% stake back in march 2018.
Furthermore, the enterprise picked up a minority stake in Squadcast, an incident response platform that helps software engineers do on-call scheduling, for $1.2 million.
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