Wipro shares plunged almost 5% even after acquiring Capco consultancy firm:
Wipro: It is one of the largest multinational companies in India located in Bangalore. Whereas the company provides services in information technology, consulting, and business process services (BPO) across India. Initially, the company was also known as “Western India Palm Refined Oil Limited” and later renamed Wipro. The company manufactures vegetables and refined oils under the brand name Kisan, Sunflower, and Camel. In 2013, the company demerged its non-IT businesses and formed Wipro Enterprises. The present Chairman & Managing Director of the company is Mohamed Premji.
Meanwhile, on Friday, March 5th, the shares of the company plunged almost 5% in the stock market. Even after the company acquired Capco consultancy services for $1.45 billion, which is the biggest-ever acquisition made by the company.
Whereas the Capital Markets Company (Capco) is a management and technology consultancy firm that provides digital, consulting, and technology services to banking and financial services to America, Europe, and the Asian Pacific regions.
“We are very happy and excited for the amalgamation of Capco consultancy firm. We would like to welcome an admirable leadership team, employees, and global clients of Capco to Wipro. Together, we can deliver high-end consulting and technology transformations, and operations offerings to our clients,” said Thierry Delaporte, CEO and Managing Director (MD) of Wipro.
On the other side, the stock was under pressure after some of the brokerage firms maintained the underweight performance of the stock from Buy.
CLSA: Underperform | Target of Rs. 460
The global research firm maintained an underperformance on the stock with the target price of Rs. 460 per equity share. The Capco acquisition aimed at adding scale to the BFSI vertical, Capco has an impressive target with material scale, decent profit, and a strong client base.
However, the transaction could impact the companies FY22/Fy23 EPS by almost -2.5% to -5% respectively. The stock may be in rangebound for some time.
Morgan Stanley: Underweight | Target of Rs. 410
The global research firm maintained an Underweight rating on the stock with the target price of Rs. 410 per equity share. The Capco acquisition surprises everyone with the size of the deal. The company might have integration challenges given its large onsite presence. Management is very confident in companies capability and growth. Wipro believes Capco will drive momentum in the BFSI vertical.
Jefferies: Underperform | Target of Rs. 380
The research firm also maintained an underperform call on the stock with the target price of Rs. 380 per equity share from Rs. 400 per share earlier. The research firm reduced its EPS estimates of the company by 5%.
The Capco acquisition will help the company to become an integrated player in the BFSI space. Moreover, the company may add almost $700 million in revenue every year from this deal.
UBS: Neutral | Target of Rs. 470
The research firm maintained a neutral call on the stock with the target price of Rs. 470 per equity share. The Capco acquisition will boost the BFSI business of the company. The company following a go-to-market approach. However, the execution of the strategy remains the key point.
The firm maintained a neutral call for balanced risk-reward at the current valuations of the company.
Credit Suisse: Neutral | Target of Rs. 470
The firm maintained a neutral call on the stock with the target price of Rs. 470 per equity share. The company is on the right way focusing on transformative businesses. However, the new initiatives will take some time to reflect.
However, the shares of Wipro Limited reported a bearish trend in the stock market on Friday. It lost 19.85 points with a 4.52% decrease and reached 419.00 INR. While in BSE, the company lost 20.05 points with a 4.57% decrease and reached 418.35 INR.
Stock Market on March 5th:
On Friday, both Sensex and Nifty continue their bearish trend in the stock market from the last session of the market. The Sensex is trading below 50,450 levels and nifty trading below 15,100 levels in the stock market. The Sensex lost 440.76 points with a 0.87% decrease and reached 50,405.32 levels. While the nifty l0st 142.65 points with a 0.95% decrease and reached 14,938.10 levels.
On the other side, the number of coronavirus cases in India on Friday, March 5th reached 1,11,73,761 with almost 1,57,548 deaths.
In the border markets, the S&P BSE SmallCap index reported a bearish trend in the stock market on Friday. It lost 318.05 points with a 1.50% decrease and reached 20,936.02 levels. Whereas the S&P BSE MidCap lost 396.39 points with a 1.89% decrease and reached a 20,587.80 level. But, the Nifty Bank lost 574.35 points with a 1.60% decrease and reached 35,228.15 level.
Top Gainers on March 5th: ONGC, GAIL India, Maruti Suzuki, Kotak Mahindra Bank, and Hero Motocorp are the top gainers in today’s stock market.
Top Losers on March 5th: IndusInd Bank, Tata Motors, Wipro, UPL, and Hindalco Industries are the top losers in today’s stock market.