Wipro Shares Plunge 8% Amid Disappointing Quarterly Results: What Investors Need to Know
News Mania Desk/Agnibeena Ghosh/22nd July 2024
Wipro’s stock experienced a significant decline of 8 percent on July 22, 2024, causing a stir among investors. As the market opened, Wipro’s share price plummeted to 511.60 INR, down 8.14 percent. This drop follows the company’s recent quarterly earnings report, which has led many to question whether this decline is a temporary setback or indicative of deeper issues within the company.
The primary factor behind Wipro’s sharp fall is its latest quarterly performance. The IT giant’s revenue for the first quarter of FY 2025, which ended in June 2024, fell to 21,896 crore INR. This is a decrease from 22,079.6 crore INR in the previous quarter and a significant drop from 22,831 crore INR reported during the same period last year. This represents a 4 percent decline in revenue year-over-year. Although Wipro reported a consolidated net profit of 3,003 crore INR, marking a 4.6 percent increase from the previous year’s 2,870 crore INR, the overall revenue decline has overshadowed this positive aspect.
In contrast, Wipro’s competitors, Tata Consultancy Services (TCS) and Infosys, have recently reported stronger results, with their shares performing well. This disparity has further intensified the focus on Wipro’s underwhelming quarterly report.
In the aftermath of these results, analysts are divided on Wipro’s future. Nomura has issued a buy recommendation for Wipro’s stock, setting a target price of 600 INR. They suggest that despite the current downturn, Wipro’s stock may offer significant upside potential. On the other hand, Citi has given Wipro a sell rating, with a target price of 495 INR, indicating a more cautious outlook.
Brokerage firms have differing views on how investors should navigate this situation. Nuvama, for example, has maintained a ‘hold’ rating on Wipro, highlighting that while the company is lagging behind its peers, it still holds potential for future growth. They have increased their target price for the stock to 530 INR from the earlier 460 INR, citing continued growth in the banking, financial services, and insurance (BFSI) sectors as a positive indicator.
Despite the current challenges, Nuvama’s report points to a potential recovery driven by improving client demand and a strong dividend yield. This could provide some reassurance to investors considering whether to hold onto their shares or exit their positions.
In conclusion, while Wipro’s recent quarterly results have led to a notable drop in its share price, opinions remain mixed on the company’s future performance. Investors are advised to stay informed about the company’s ongoing developments and market conditions to make well-informed decisions. The contrast between Wipro’s performance and that of its peers underscores the importance of closely monitoring both financial results and broader market trends.
