Wipro Analysis: ADR Jumped 16% then fell 8% after 2 days, Why?

In a thrilling turn of events in the financial arena, the third-quarter results of India's leading IT firms have set the stock market abuzz. Wipro, alongside TCS, Infosys, and HCL Technologies, collectively experienced a staggering rise of $22 billion in market capitalization over just two market sessions. Wipro, in particular, stole the spotlight with a remarkable 14% surge in its share prices, showcasing a stellar performance despite economic challenges. So in this blog we will give you a brief about the company's profile and some amazing facts related to it just stick with us to the very end.

 

About Wipro

 

Wipro, the third-largest software firm in India, has a rich history dating back to its founding in 1945. Initially a producer of refined and vegetable oils, Wipro transitioned to the IT industry under the visionary leadership of its founder, Azim Premji. Born on July 24, 1945, Azim Premji transformed a vegetable oil firm into a global IT corporation, earning him the title of the "Bill Gates of India."

 

Azim Premji's Journey

Azim Premji, a visionary leader, took charge of Wipro at the young age of 21 in 1966, following his father's passing. Under his leadership, Wipro gained prominence in the IT industry in the 1990s, achieving ISO certifications and going public on the New York Stock Exchange in 2000. Azim Premji's philanthropic efforts led to a gradual decline in his Forbes India Rich List ranking, emphasising his commitment to charitable causes.

 

 

Wipro's IT Journey in the 90s

Wipro made a name for itself in the IT industry during the 1990s. In 1994-1995, five Wipro operation units got ISO 9001 certification. By the year 2000, Wipro went public on the New York Stock Exchange, and between 1997 and 2002, it was a leading revenue generator.

In February 2002, Wipro became the first Indian provider of software technology and services to get ISO 14001 certification. By 2004, the company's value exceeded $1 billion, and it decided to venture into the energy sector. Azim Premji, the founder, was recognized for his contributions with the Padma Bhushan in 2005 and the Padma Vibhushan in 2011, one of the nation's top civilian honours.

 

 

Wipro's Product and Services

Wipro's diverse portfolio includes IT services, product engineering solutions, technology infrastructure services, business process outsourcing, and consulting services. The company's revenue, which reached $8.5 billion last year, highlights its significant role in the Indian IT sector.

 

1. IT Services 

Wipro takes charge as the go-to IT solution provider for businesses, offering a comprehensive suite of services. From cutting-edge e-Business solutions to robust Enterprise Application Services, Wipro ensures that all IT requirements are met with precision and innovation.

 

2. Consulting Services

Wipro's Consulting Services play a pivotal role in assisting businesses across diverse industries. These services are geared towards developing comprehensive business and technological frameworks. The aim is to empower enterprises to achieve their objectives seamlessly. Wipro's expertise spans various domains, including business, quality, process, and technology consulting, making it a one-stop solution for a wide range of consulting needs.

 

 

3. Business Process Outsourcing (BPO)

Wipro BPO sets itself apart with a commitment to excellence, innovation, and a robust self-sustaining process structure. With a focus on leveraging domain expertise and significant human resources, Wipro BPO tailors personalised service options to meet the unique needs of clients. This ensures adaptable, economical, and high-quality services across the board.

 

4. Technology Infrastructure Services (TIS)

Wipro's Technology Infrastructure Services (TIS) takes the lead as the largest Indian IT infrastructure service provider. Boasting a broad clientele, TIS serves over 200 clients in Europe, the US, and Japan, and an additional 650 clients in India. In terms of revenue, personnel, and clients, Wipro's TIS division sets the benchmark in the Indian IT infrastructure service sector.

 

5. Product Engineering Solutions

At the forefront of global Research and Development (R&D) services, Wipro stands as an independent provider facilitating swift product launches. Leveraging the Extended Engineering approach, Wipro maximises R&D efforts, tapping into unique expertise and information on a global scale. This approach also encompasses access to a diverse workforce and advanced technological resources.

 

 

Wipro's Remarkable Leap

Wipro's strategic moves in securing substantial deals and signalling a potential consulting revival have sparked positivity despite facing a 12% YoY dip in net profit and a 4.4% decline in consolidated revenue. Analysts at IDBI Capital have upgraded Wipro's rating to 'Buy,' citing promising large deal wins. However, Morgan Stanley exercises caution, emphasising prudence amid lower visibility on FY25 compared to peers. The tug of war between optimism and caution adds suspense to Wipro's comeback tale.

 

IT Giants Drive Market to New Heights

The collective contribution of TCS, HCL, Infosys, and Wipro played a pivotal role in the $22 billion surge in market value. HCL Technologies reached an all-time high with a 6.2% increase in consolidated net profit at ₹4,350 crore. The enthusiasm spread to other sectors, with notable gainers including Infosys, Bharti Airtel, Tech Mahindra, HDFC Bank, and Reliance Industries, all witnessing growth of over one percent.

 

Wipro's Q3 Results Analysis

Shares of Wipro witnessed a substantial jump of nearly 14% on January 15, adding Rs. 8,168.68 crore to its market valuation. Despite a 12% decline in net profit to Rs. 2,694.2 crore in the December quarter, Wipro's stock reached its 52-week high of Rs. 526.45 on the BSE.

Wipro's shares in the US dropped by eight percent to $5.775 on Tuesday. The company made a QoQ profit of Rs. 2,694 crore, just one percent more than before but 12 percent less compared to the same time last year. Wipro's total sales were Rs. 22,205 crore in the last three months of the year, a 4.4 percent drop from the same period last year. They expect to make between $2,615 million to $2,669 million in their IT services. In the same period, they got new business worth $3.8 billion, a bit more than before, but 13.5 percent less than last year. Big deals were at $0.9 billion, showing an 8.3 percent drop from last year.

 

 

Analysts' Perspectives

Vikas Jain, Senior Research Analyst at Reliance Securities, views Wipro's results as better-than-expected. However, cautionary notes from Morgan Stanley and Nomura add a layer of uncertainty to Wipro's future trajectory. The soft Q4 guidance has raised concerns, and analysts are closely monitoring the balance between optimism and caution.

 

Interesting Facts About Wipro

1. Wipro is the fourth-largest Indian IT company, surpassing HCL Technologies in 2021.

2. Wipro was founded as a producer of refined and vegetable oils during the British era.

3. Azim Premji's philanthropic efforts led to a decline in his Forbes India Rich List ranking.

4. Wipro, with 120,000 employees representing 74 nationalities, was recognized for employee diversity in 2011.

5. Azim Premji rejected Narayana Murthy's job application, a decision later considered one of his biggest mistakes.

 

Did you know?

Did you know that Azim Premji, the founder of Wipro, once made a big decision? He turned down a job application from Narayana Murthy, the co-founder of Infosys. Later, Azim admitted it was one of his biggest mistakes not to hire Murthy. This adds an interesting twist to the stories of these two important people in the Indian IT world. It shows that careers can take unexpected turns, and the choices people make can shape the history of businesses.

 

Conclusion

Wipro did really well in the third quarter, showing how resilient and smart they are in the fast-changing IT world. Even though they used to make vegetable oil, under Azim Premji's leadership, they've become a big IT player globally. This shift highlights India's strength in IT. Wipro's careful mix of hope and caution makes it interesting to see where they go next in the tech and business world.

Disclaimer: This information is for informational purposes only and should not be considered as investment advice. Always do your research and consult with a financial advisor.