Neutral on Wipro, target price Rs 450: Motilal Oswal

Motilal Oswal has neutral call on Wipro with a target price of Rs 450. The current market price of Wipro is Rs 423.45.

Wipro, incorporated in the year 1945, is a large cap company with a market cap of Rs 231575.61 crore, operating in IT software sector.

Wipro's key products/revenue segments include software services, networking, storage equipment, servers, software licenses and other operating revenue for the year ending 31-Mar-2020.

Investment rationale
Wipro announced the acquisition of Capco, a London-based BFSI-focused business and technology consulting firm, for a sum of $1.45 billion on March 4, 2021.

The brokerage see Wipro’s aspiration to scale up its BFSI practice as a positive, especially given the potential spend by large banks on technology over the next few years. Moreover Motilal says that Indian IT companies have historically lagged behind their global peers in terms of consulting capabilities – this is a gap that Capco could bridge for Wipro.

However, it sees significant risk from this acquisition on account of integration risk due to Wipro’s weak track record and execution risk on challenges related to realizing potential synergies.

Financials
For the quarter ended 31-12-2020, the company has reported a consolidated total income of Rs 16324.10 crore, up 4.30 per cent from last quarter's total income of Rs 15651.40 crore and up 1.52 per cent from last year same quarter's total income of Rs 16080.20 crore. Company has reported net profit after tax of Rs 2987.70 crore in latest quarter.

Promoter/FII Holdings
Promoters held 74.01 per cent stake in the company as of Dec 31, 2020, while FIIs held 8.46 per cent, DIIs 6.08 per cent and public and others 11.45 per cent.