Wipro pips HCL Tech in m-cap to become third most-valued Indian IT firm

On Friday, Wipro recaptured the third most valuable information technology (IT) business in India, surpassing HCL Technologies in terms of market capitalization (market-cap).

Wipro was ranked 12th in the overall m-cap ranking at 09:37 a.m., with an m-cap of Rs. 2.65 trillion (US$ 35.28 billion). Meanwhile, according to BSE info, HCL Technologies has stood at number 13 with an m-cap of Rs. 2.62 trillion (US$ 34.89 billion).

After an 18-month period, Wipro has reclaimed this position. Wipro had a market capitalization of Rs. 1.449 trillion (US$ 19.29 billion) on October 22, 2019, while HCL Technologies had a market capitalization of Rs. 1.444 trillion (US$ 19.23 billion).

According to data, Tata Consultancy Services (TCS) is the most valuable IT company, with a market capitalization of Rs. 11.47 trillion (US$ 152.72 billion), followed by Infosys (Rs 5.72 trillion (US$ 76.16 billion)).

Wipro's share hit a new high of Rs. 494.50 (US$ 6.58) on Thursday, up 16% in the last five trading days, after the company posted healthy sales growth and margins in the IT services sector in March (Q4FY21). HCL Technologies, on the other hand, was down 2% over the same time period. On January 13, the stock reached an all-time high of Rs. 1,073.55 (US$ 14.29). The company is expected to release its Q4FY21 results today.

Wipro delivered solid results for the third quarter in a row, driven by robust volume growth, after a period of modest growth in recent years.

According to analysts at Edelweiss Securities, "Wipro's turnaround has been aided by the new CEO's approach, as well as a solid demand market. Improved execution, in addition to these, is expected to drive earnings in the future.” Overall, the brokerage firm is positive about the demand environment and keeps its ‘BUY' rating on the stock, with a target price of Rs. 550 (US$ 7.32) unchanged.

The primary highlights of the period, according to ICICI Securities, were positive deal wins, up 16.7% quarter on quarter (QoQ) to US$ 1.4 billion, a positive net addition of 7,404 hires, and higher offshore, up 180 basis points to 54.5%. It added, “IT services revenues are expected to be in the range of US$ 2,195 - 2,238 million in Q1FY22E, representing 2.0-4.0% QoQ growth. The forecast excludes Capco and Ampion's reported acquisitions.”

Wipro, according to the brokerage firm, has all of the main ingredients for long-term development. It added, "In addition, increased deal wins, increased demand in Europe, client mining, the acquisition of new logos, and traction in digital revenues all augur well for sales growth." As a result, we are optimistic on the stock in the long run.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.