DBS analyst Sachin Mittal maintained a Sell rating on Wipro (WIT – Research Report) yesterday and set a price target of $2.47.
Sachin Mittal has given his Sell rating due to a combination of factors affecting Wipro’s performance. Despite meeting street expectations with its operating income and revenue, Wipro’s guidance for the upcoming quarter indicates a decline in IT service revenue, falling short of market expectations. This suggests potential challenges in maintaining growth momentum.
Additionally, Wipro faces pressure on its margins due to rising labor costs, higher attrition rates, and the acquisition of low-margin business units. The global economic environment, characterized by potential recession and inflationary pressures, further complicates the outlook, as it may lead to reduced IT spending. Moreover, stricter H-1B policies and recent US tariffs could increase operational costs for Indian IT firms like Wipro. These factors, combined with the slow integration of new acquisitions and a higher focus on consultancy services, which may underperform during economic slowdowns, contribute to the Sell rating.
In another report released on April 16, Goldman Sachs also maintained a Sell rating on the stock with a $2.70 price target.
WIT’s price has also changed dramatically for the past six months – from $6.610 to $2.720, which is a -58.85% drop .