(Long Term Cash : 3 Months)
Wipro Ltd (NSE Cash) - BUY
491 - 485
The stock has seen a decent correction in
the recent past and has reached around its
Potential Reversal Zone (PRZ) of a ‘Bullish
Butterfly’ pattern on weekly chart, which is
The stock traded around the mentioned
PRZ levels for a month and is now coming
out of the consolidation phase.
The ‘RSI - Smoothened’ oscillator is also
rebounding from extreme oversold territory
and is giving positive crossover with its
average on weekly chart, indicating
possibility of a reversal in the counter.
Considering the formation of Bullish
Harmonic pattern along with other
technical evidences, we expect a healthy
move in the upward direction.
Thus, the stock can be bought from current
level to a decline up to
485 for a target of
565 in coming three months. A stop loss
can be placed at
Source: Falcon ( Chart time: 09:50 IST on 19/10/2016 )
October 19, 2016
Moderate outlook on growth: For 2QFY2017, the company has given a revenue
guidance of US$1,901-1,939mn, implying a US $ qoq growth of 0-1% on CC,
all organic as full integration of HPS has been completed in 1QFY2017. So after
the 2QFY2017 guidance, the expected recovery in the company looks more likely
in FY2018. We expect US$ and INR revenue CAGR to be at 8.4% and 7.9%,
respectively, over FY2016-18E.
Target sales CAGR of 20% and EBIT Margin of 23%: The company as part of its
52 week high/low
vision for 2020, is targeting to reach US$15bn revenues with 23% EBIT margin,
implying revenue CAGR of ~20% over the next four years,. if the margins by
Avg. Daily Volume
300bps expansion, then it would imply an even higher CAGR for earnings.
Going by the guidance, the company’s organic growth outlook is not even closer
Face Value (
to its peers. However, on the
acquisition front, the company has been very
aggressive in comparison to its peers.
Outlook and Valuation: On the valuations front, the stock is currently trading at
Shareholding Pattern (%)
14.8x its FY2017E and 13.7x its FY2018E EPS, i
at a discount to its peers, which
we expect the gap to narrow down once the company’s performance comes in
line with its peers in terms of growth and profitability. We recommend an
Accumulate on the stock.
MF / Banks / Indian Fls
OPM PAT EPS Adj. ROE P/E P/BV EV/EBITDA EV/Sales
FII / NRIs / OCBs
Indian Public / Others
October 19, 2016
Research Team Tel: 022 - 3935 7600
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October 19, 2016