Wipro an outperformer,tgt Rs 520: Karvy
Karvy research has maintained outperformer rating on Wipro with target price of Rs 520 in its July 10, 2008 report. "Against a dollar revenue guidance of USD 1060, we are assuming its global IT revenues would be only USD 1027 million in Q1FY09. The reason being the R&D services component, might experience strong head winds and the volume growth in Q1 would be muted. Partly aided by the rupee depreciation factor, partly there are no significant cost pressures (arising out of wage inflation) as the wage revision would be undertaken either from Q2 or Q3. As a result we expect the margins to modestly expand, enabling the operating profit to improve by 4.3%. In terms of treasury income we don’t expect any serious decline and after adjusting depreciation and taxation, the net profit would be up 6.9%. The slew of acquisition had a negative impact on the return on capital employed, which we believe some turnaround from Q1 onwards. At the current price the stock is trading at attractive valuations 15xFY09E and 12xFY10E and expect the stock to give a return of 20% to Rs 520according to karvy report.
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