Wipro shares hit 52-week low after Q2 results. Good time to buy or sell?

• Shares of Wipro fell over 6% to 52-week low on BSE in early deals on Thursday

Shares of Wipro Ltd fell over 6% in early trading session on Thursday to hit a 52-week low of 383 on the BSE after the IT services major reported over 9% in its net profit in the September quarter. 2,659 with a decline of Rs. The pressure eased due to rising employee spending and declining non-US income.

The Bengaluru-based company's revenue from operations stood at ₹22,539 crore, up 14.6% from ₹19,667 crore in the previous year. Wipro, in its outlook for the December quarter, said it expects revenue from our IT services business to be in the range of $2,811 million to $2,853 million. This translates to a gradual increase of 0.5% to 2%.

“We lower our FY23/FY24 EPS estimate by 6%/2%, taking into account growth and elevated risk factors. "We maintain our neutral stance as we consider the current valuation to be fair," domestic brokerage and research firm Motilal Oswal said in a note.

The brokerage maintained its neutral stance on Wipro shares with a target price of ₹380 as it awaits further evidence of the execution of Wipro's latest strategy, and its growth struggles over the past decade before getting more constructive on the IT stock. A successful change has come since.

Wipro reported modest Q2 performance. Revenue growth and margins were both soft, but broadly in line with expectations. Q3 revenue growth guidance was disappointing. An EBIT margin of 15% in H1, with the effect of two-month increments to come (in Q3), means the company will not be able to report margins higher than the announced floor of 15%," said PhilipsCapital

In the past eight quarters, Wipro's margins have declined by over 600 bps, mainly due to acquisitions such as Capco and Rising, which has led to a major reset on gross margin levels.

These acquisitions have also consumed significant cash -- refusing to make any buybacks in the near future. All this has not resulted in any significant outperformance on the growth front - as Wipro is likely to report, below the industry average growth in FY23, it highlighted.

“Overall, we do not see any trigger for Wipro stock, which could lead to its rerating after a sharp correction (CYTD, -43%). Affordable valuations and high dividend yield limit the downside potential of the stock," the note said. The brokerage has maintained its neutral rating on the stock with a target price of ₹390.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.