Nuvama Institutional Equities has upgraded Wipro to ‘Buy’ from ‘Hold,’ increasing the target price to ₹700 from ₹520, citing a favorable portfolio mix, improving macro conditions, and a new CEO-driven growth strategy. The brokerage highlights Wipro’s attractive risk-reward profile, driven by its positioning to capitalize on the revival of discretionary spends and BFSI recovery.
Nuvama notes two critical differentiators for Wipro this time: its portfolio’s high exposure to discretionary spends (60-65% of revenue) and the internal appointment of a CEO with a deep understanding of the company’s legacy and growth challenges. The new leadership is expected to drive sharper growth recovery, aiming to bring Wipro’s performance in line with peers.
Portfolio positioned for macro recovery
Wipro’s discretionary spend-heavy portfolio, previously a drag during FY24 due to cutbacks, is now poised to benefit from improving U.S. macroeconomic dynamics and the Fed’s recent interest rate cuts. Segments like consulting, led by Capco, have already shown recovery, with validation from peers like Accenture, which projects growth in consulting for FY25.
The company’s strong exposure to BFSI (34% of revenue), a sector impacted by global tech spend reductions, is also expected to see recovery, as indicated by positive commentary from major U.S. banks and peers such as Infosys and TCS.
With inexpensive valuations and a portfolio well-aligned for growth in discretionary and BFSI tech spending, Nuvama believes Wipro is at a pivotal moment. The brokerage rolls forward its target valuation to 25x FY27E PE, reflecting confidence in the company’s ability to achieve growth on par with industry leaders.
