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Narnolia Financial
Wipro (Accumulate)
CMP: ₹284.8
Target: ₹314
FY19 was restructuring year for Wipro where the company went through lot of changes all through the year .The company restructured its segments for better performance whereas exited some businesses (India PSU, data centre business) which was unnecessarily dragging the profitability. This resulted in revenue growth of 7.5 per cent y-o-y and margin expansion of 180 bps for FY19. Going ahead, revenue performance in FY20 looks better than FY19 on the back of order booking in 4QFY19 which is closure to double digit growth.
Even the digital revenue which is growing more than 30 per cent y-o-y is giving some visibility of better growth in FY20. However we expect the growth momentum to gear up more in 2HFY20 as most of the segment barring BFSI, E&U and consumers are seeing challenges in 1HFY20, thus manufacturing (after restructuring done in Europe), communication (investment in 5G) and technology to gear up as the macro environment stables and projects starts to ramp up for the respective verticals.
After seeing weak guidance for 1QFY20 and some challenges in few segments. We have reduced our revenue estimates by 2.8 per cent for FY20 and PAT by 1.8 per cent. However, we expects margin to improve in FY20.
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