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Wipro, the Bengaluru-based IT services provider, experienced a significant stock price surge on September 13, climbing as much as 4%, propelling the Nifty IT index to a new high. This upward trend in Wipro's share price occurred despite a 'Sell' rating issued by Kotak Institutional Equities following an interaction with CEO Srini Pallia. Kotak expressed a wait-and-see approach, stating they await progress on the company's turnaround journey, highlighting the complex nature of the turnaround process, requiring alignment across various elements.
The brokerage firm highlighted the need for Wipro to bridge the growth gap with its competitors as a crucial step in the turnaround. Kotak maintained a cautious stance on the stock, valuing it at an unchanged 17 times multiple on September 2026E earnings, leading to a fair value of ₹460, reaffirming their 'Sell' rating. In their analysis, Kotak emphasized Wipro's focus on organic growth, complemented by strategic tuck-in or beach-head acquisitions. These acquisitions, such as Eximius (chip design) and CAS (telecom), have proven successful, with smaller acquisitions favored by the company.
Furthermore, Kotak acknowledged the growing momentum in the US market for Wipro, particularly in the healthcare, BFSI, and hi-tech sectors. The management prioritizes consistent execution across multiple quarters. The CEO emphasizes execution and driving profitable growth. The existing organizational structure remains unchanged, with leadership and personnel evolving through a combination of internal promotions and external hires. To enhance delivery and sales excellence, Wipro is implementing initiatives to improve client-centricity metrics, with the CEO actively monitoring progress and driving an increase in qualified leads. Wipro's strategy involves optimizing a combination of personnel, incentives, plans/processes, solutioning, and pricing to enhance performance.
Source: Wipro shares surge despite Kotak's bearish call citing turnaround progress