ICICI Securities has kept its 'Reduce' rating on Wipro with a target price of Rs 154. The brokerage cites muted revenue growth and a 38% decline in new deal bookings as key concerns. Investors are closely monitoring if the company can convert its pipeline of delayed deals into actual revenue growth in the coming quarters.
Brokerage firm ICICI Securities has maintained its 'Reduce' rating on IT services company Wipro. The brokerage has set a price target of Rs 154 for the stock, reflecting caution over the company’s current operational performance. A 'Reduce' rating generally implies that the brokerage expects the stock to underperform compared to the broader market or its sector peers.
The cautious stance stems primarily from Wipro’s recent financial updates. For the third quarter of fiscal year 2027, the company has provided a conservative revenue growth guidance in constant currency terms, ranging between -1.5% and +0.5%. This follows a challenging first half of the year, marked by a 38% decline in new deal bookings compared to the previous year.
New deal bookings are a vital metric for IT companies as they represent the future pipeline of revenue. A significant drop in these bookings suggests that the company is currently facing difficulties in securing new business or expanding existing contracts. The brokerage noted that the lack of broad-based growth across different industry sectors and global markets remains a structural challenge for the company.
Management at Wipro has expressed hope for a potential recovery in the fourth quarter. They attribute this optimism to deals that were previously delayed by clients and are now expected to start. However, analysts at ICICI Securities have expressed skepticism about this timeline. They argue that a sustained recovery in revenue requires consistent growth across a wider range of industries rather than relying on delayed contracts alone.
To arrive at the Rs 154 price target, the brokerage updated its financial model to cover the period from the third quarter of fiscal year 2028 through the second quarter of 2029. By applying a target price-to-earnings multiple of 11x to an estimated earnings per share of Rs 14, the firm arrived at this valuation. The rating reflects concerns that the company lacks the momentum needed to drive significant upside in its stock price in the near term.
For investors, the IT sector is currently navigating a period where clients are being more careful with their discretionary spending. This macro environment adds pressure on major IT firms to prove their ability to win and execute deals efficiently. The key area to track for shareholders will be the actual conversion of the reported deal pipeline into realized revenue in upcoming quarters, as well as any signs of growth across diverse industry verticals.