Nomura Securities Downgrades Wipro Ltd. (WIT) to Reduce

October 24, 2016 7:19 AM EDT
Get Alerts WIT Hot Sheet
Price: $9.33 -1.48%

Rating Summary:
    6 Buy, 7 Hold, 6 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 31 | New: 42
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Nomura Securities downgraded Wipro Ltd. (NYSE: WIT) from Neutral to Reduce.

Analyst Ashwin Meht commented, "WPRO has been our least-preferred pick in tier 1 IT, given: 1) its weaker positioning in key markets (US/Europe); 2) well-entrenched competition in faster growing services for the industry (IMS/Engineering services); 3) limited progress in client mining; and 4) likely margin drag as it competes to close the gap with peers. These fears continue to play out with: 1) USD revenue -0.8% q-q and flattish organic growth guidance for 3Q, a seasonally strong qtr; 2) slowing momentum in IMS/Engineering services; 3) an 8% y-y decline at the top-10 clients; and 4) while margins were better in 2Q partly driven by better USD-INR realisation, we see continued pressure from dilutive acquisitions and the need to be disruptive or invest to regain growth. WPRO recorded a 4% organic USD revenue CAGR over FY12-16 and we expect a similar 3% over FY16-18F. Overall, we expect FY16-18F revenue/EPS CAGRs of 6%/1% and believe flat EPS growth and an uphill climb to regain growth will keep multiples depressed. Downgrade to Reduce with INR450 TP."

For an analyst ratings summary and ratings history on Wipro Ltd. click here. For more ratings news on Wipro Ltd. click here.

Shares of Wipro Ltd. closed at $9.78 yesterday.



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