External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

External broker reports(aggregated public sources)

A Relationship Beyond Broking

Nirmal Bang, one of the leading stock broking companies in India, caters to retail and institutional clients by offering them a range of financial products and services, including equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS.

Nirmal Bang is drawn from a diversity of professional backgrounds, and blend of experience, skill and dedication is shared with its clients. Nirmal Bang emphasizes adequate, thorough research local and world-wide developments, balancing these with the astute discovery of intrinsic values, synergies and growth. The aim is simply to help the investors to maximize their returns.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>4QFY22 key takeaways: While the revenues were broadly in line with expectations, supply-side challenges meant that margins disappointed.</li></ul><div><div><div><div><ul><li>A massive margin regime change on the cards in FY24, but this will not mean much from a stock performance perspective in the next 12 months:</li></ul><div><div><div><div><ul><li>Tier-2 could face significant risks in the new environment: We fear Indian Tier-2 IT would suffer more because of vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix (client, service line, vertical), which could throw up negative growth surprises, and a larger exposure to non-Global 1000 clientele whose profits are more vulnerable in the current challenging macro environment. Indian Tier-2 IT is now at a PE premium of ~20% to Tier-1 from a discount of 14% on 1st January, 2020.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

4QFY22 key takeaways: While the revenues were broadly in line with expectations, supply-side challenges meant that margins disappointed.A massive margin regime change on the cards in FY24, but this will not mean much from a stock performance perspective in the next 12 months:Tier-2 could face significant risks in the new environment: We fear Indian Tier-2 IT would suffer more because of vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix (client, service line, vertical), which could throw up negative growth surprises, and a larger exposure to non-Global 1000 clientele whose profits are more vulnerable in the current challenging macro environment. Indian Tier-2 IT is now at a PE premium of ~20% to Tier-1 from a discount of 14% on 1st January, 2020.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sector Update - Cut Target Prices yet Again; Customer Stress Shows up Earlier than Expected

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<div><ul><li>Consulting acquisitions adversely impact capital allocation - <span style="font-size: var(--content-font-size);">Wipro (WPRO) reported 4QFY22 IT Services revenue of USD2.72b (+3.1% QoQ) in constant currency (CC), missing our estimate of +3.5% QoQ CC.</span></li></ul><div><ul><li>4QFY22 below expectation, 1QFY23 guidance weak - <span style="font-size: var(--content-font-size);">In 4QFY22, IT Services revenue in CC grew 3.1% QoQ, INR EBIT rose 2.7% YoY, and INR PAT was up 4% YoY.</span></li></ul><div><ul><li>Key highlights from the management commentary - <span style="font-size: var(--content-font-size);">The management continues to see good momentum with CapCo. Over the last year, WPRO has been able to close 60 strategic deals with CapCo and it remains positive on the business with very strong order book and strongest ever bookings.</span></li></ul></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Consulting acquisitions adversely impact capital allocation - Wipro (WPRO) reported 4QFY22 IT Services revenue of USD2.72b (+3.1% QoQ) in constant currency (CC), missing our estimate of +3.5% QoQ CC.4QFY22 below expectation, 1QFY23 guidance weak - In 4QFY22, IT Services revenue in CC grew 3.1% QoQ, INR EBIT rose 2.7% YoY, and INR PAT was up 4% YoY.Key highlights from the management commentary - The management continues to see good momentum with CapCo. Over the last year, WPRO has been able to close 60 strategic deals with CapCo and it remains positive on the business with very strong order book and strongest ever bookings.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Wipro - Weak Growth and Margin Guidance to Cap Upside

<div><ul><li>4QFY23 performance in line; balance sheet deterioration seen: Wipro’s QoQ CC IT Services revenue growth in 4QFY22 at 3.1% (6th successive quarter of 3%+ growth) was in line.</li></ul><div><ul><li>EBIT margin for IT Services at 17% was in line. <span style="font-size: var(--content-font-size);">The large deal TCV for FY22 was US$2.3bn, which is lower than for 2HFY21.</span></li></ul><div><div><div><div><ul><li>However, ACV grew by 30% in FY22, likely due to a large number of short-cycle deals. There was deterioration in unbilled revenue in 4QFY22, leading to it becoming 7.7% of FY22 revenue against 4.4% in FY21.</li></ul></div></div></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

4QFY23 performance in line; balance sheet deterioration seen: Wipro’s QoQ CC IT Services revenue growth in 4QFY22 at 3.1% (6th successive quarter of 3%+ growth) was in line.EBIT margin for IT Services at 17% was in line. The large deal TCV for FY22 was US$2.3bn, which is lower than for 2HFY21.However, ACV grew by 30% in FY22, likely due to a large number of short-cycle deals. There was deterioration in unbilled revenue in 4QFY22, leading to it becoming 7.7% of FY22 revenue against 4.4% in FY21.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

External broker reports(aggregated public sources), Emkay Global Financial Services Limited

Emkay

Emkay Global Financial Services Limited

Emkay Global Financial Services Ltd. is a leader in the financial services sector, actively creating wealth for our clients for over two decades. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<div><div><div><div><ul><li>Deal rationale - The acquisition will enable Wipro to: 1) strengthen its SAP consulting capabilities; 2) leverage Rizing’s long-tenured relationship with SAP, strong GTM, co-run leads and customer referrals to drive revenue growth; 3) enhance its end-to-end capabilities in SAP EAM (SAP Enterprise Asset Management), HCM (Human Capital Management) and SAP for CI (Consumer Industries) through Rizing’s complementary services; 4) strengthen Wipro SAP focus industries of Retail &amp; Consumer Goods, Energy and Utilities; 5) expand its local presence in Australia, Canada, Germany and the US; and 6) expand presence in existing key accounts and access to F2000 clients by bringing deep consulting capabilities.</li><li>Deal structure and timelines- Under the deal, Wipro will acquire a 100% stake in Rizing for USD540mn in cash. The deal is expected to be completed by Q1FY23-end, subject to anti-trust and other regulatory approvals.</li><li>A brief profile of Rizing - Rizing, head-quartered in CT, USA, was founded in 2018 and is the holding company of Rizing Group.</li></ul><ul style="list-style-type: none;"><li><div><div><div><div><ul style="list-style-type: none;"><li> </li></ul></div></div></div></div></li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Deal rationale - The acquisition will enable Wipro to: 1) strengthen its SAP consulting capabilities; 2) leverage Rizing’s long-tenured relationship with SAP, strong GTM, co-run leads and customer referrals to drive revenue growth; 3) enhance its end-to-end capabilities in SAP EAM (SAP Enterprise Asset Management), HCM (Human Capital Management) and SAP for CI (Consumer Industries) through Rizing’s complementary services; 4) strengthen Wipro SAP focus industries of Retail &amp; Consumer Goods, Energy and Utilities; 5) expand its local presence in Australia, Canada, Germany and the US; and 6) expand presence in existing key accounts and access to F2000 clients by bringing deep consulting capabilities.Deal structure and timelines- Under the deal, Wipro will acquire a 100% stake in Rizing for USD540mn in cash. The deal is expected to be completed by Q1FY23-end, subject to anti-trust and other regulatory approvals.A brief profile of Rizing - Rizing, head-quartered in CT, USA, was founded in 2018 and is the holding company of Rizing Group. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Wipro - Rizing Acquisition to Strengthen Wipro’s SAP Consulting Capabilities

<ul><li>We are downgrading Indian IT Services sector to underweight (UW) on a 12-month basis, though in the near term, there is relative earnings resilience against certain domestic sectors.</li><li>But, the likely 1HFY23 strength should be used to pare positions if overweight (OW), especially in expensive Tier-2 companies.</li><li>Nifty IT index is up ~144% from 1st Jan, 2020 till 31st March, 2022 while Nifty is up 44% (Nifty Bank up only 13%!)</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We are downgrading Indian IT Services sector to underweight (UW) on a 12-month basis, though in the near term, there is relative earnings resilience against certain domestic sectors.But, the likely 1HFY23 strength should be used to pare positions if overweight (OW), especially in expensive Tier-2 companies.Nifty IT index is up ~144% from 1st Jan, 2020 till 31st March, 2022 while Nifty is up 44% (Nifty Bank up only 13%!)Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Information Technology Sector- Sector Update- Move to Underweight

India

Wipro Limited specializes in IT and computer related technologies. The Group's services encompass a number of areas, including software architecture, business intelligence systems, e-commerce, data warehousing, Internet access devices, network management, system administration, messaging systems, IT consulting and design. Wipro also has a presence in niche markets of consumer products.

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Wipro Ltd (WPRO IN)

Sector Update - Cut Target Prices yet Again; Customer Stress Shows up Earlier than Expected

Just 40 days post our downgrade of the IT sector to ‘underweight’, we have reduced target prices yet again and have moved our entire coverage...

Nirmal Bang

Wipro - Weak Growth and Margin Guidance to Cap Upside

Wipro (WPRO) reported 4QFY22 IT Services revenue of USD2.72b (+3.1% QoQ) in constant currency (CC), missing our estimate of +3.5% QoQ CC

Motilal Oswal

Wipro - Rerating in a Limbo?

In the last 2 years Wipro saw the highest PE rerating among Indian Tier-1 IT players under Thierry Delaporte, who became CEO amidst the pandemic,...

Nirmal Bang

Wipro - Rizing Acquisition to Strengthen Wipro’s SAP Consulting Capabilities

Wipro has agreed to acquire a 100% stake in Rizing Intermediate Holdings Inc. (Rizing), a global SAP consulting firm, for a cash consideration of...

Emkay

Information Technology Sector- Sector Update- Move to Underweight

We are downgrading Indian IT Services sector to underweight (UW) on a 12-month basis, though in the near term, there is relative earnings...

Nirmal Bang

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