Recommendation: Buy
CMP = Rs 495 (as of Thursday)
Price target: Rs 590
Key points
- The Q2FY2008 performance of Wipro has been boosted by the incremental revenues from the recent acquisitions: Infocrossing in the global information technology (IT) service business and Unza in the consumer care business.
- The margin improvement of 150 basis points in the global IT service business is higher than expected and largely driven by the leverage in the overheads cost.
- The Q3 revenue guidance of around 6.9% sequential growth after adjusting for the inorganic revenues is healthy, given the lower number of working days in the quarter.
- I maintain Buy call on the stock with a revised price target of Rs 590.
