Firstcall Research call on Wipro

Firstcall Research on Wipro - Target Rs 760

 

Firstcall Research has recommended a buy rating on Wipro, with price target of Rs 760, in its report.

"At the current market price of Rs.678.00 the stock is trading at a P/Ex of 21.45x for FY10E and 18.85x for FY11E.

The EPS of the stock is expected to be at Rs.31.60 and Rs.35.96 for FY10E and FY11E respectively. On the basis of price to book value, the stock trades at 5.44x and 4.22x for FY10E and FY11E respectively.

 

Global IT Services and Products business added 31 new clients during the quarter taking the total active clients to 822 clients. A large Europe-based global steel manufacturer is leveraging Wipro's business transformation expertise to engage in business driven initiatives during a period of strategic restructuring.

 

Wipro entered into a multi-year outsourcing engagement with a leading Global tobacco group, to help the customer improve the effectiveness and efficiency of application support services for its global business operations.

 

Wipro Arabia won a very large order from an upcoming university in Saudi Arabia for end to-end set up of their IT and Telecom infrastructure.

 

Another prestigious win in the government sector was a turnkey project for implementation of FINnet (Financial intelligence network) for tracking money laundering, financing of unlawful activities and other economic crimes occurring within the country for Financial Intelligence Unit, Ministry of Finance, and India.

 

Infocrossing, a Wipro subsidiary signed a significant and large multi-year IT Infrastructure outsourcing contract with a large outsourcer of data processing services in the US.

 

During the quarter, Wipro completed its acquisition of the Yardley business in Asia, Middle East, Australasia and certain African markets from UK-based Lornamead Group. Wins in the infrastructure segment include turnkey implementation of State Data Center projects for Gujarat and Maharashtra, end-to-end implementation of a Data Center for Shipping Corporation of India (SCI), and upgrade and enhancement of the Primary Data Center and Disaster Recovery Infrastructure for Oriental Bank of Commerce.

 

The Net sales and PAT of the company is expected to grow at a CAGR of 15% and 17% respectively over FY08 to FY11E. Company has seen a positive demand environment which has driven broad based sequential growth across all their verticals, service lines and geographies.

 

We recommend a "BUY" on the stock with a target price of Rs.760.00 for medium to long term." says Firstcall research report.