We do not see stock outperformance as long as Wipro lags its peers in growth
Wipro delivered a decent quarter that came on the back of muted expectations. Revenue growth stood at the mid point of its stated guidance, margin was not disappointing and the management sounded positive on deal wins.
While weakness in certain verticals was highlighted as was the case with some of its peers, overall the outlook has not worsened, post the Q2 FY20 earnings report.
The sluggish performance so far has resulted in significant underperformance of the stock compared to the benchmark Nifty as well as the IT index. While the undemanding valuation at 14X FY21e earnings protects the downside and hence could be considered as a defensive strategy, we do not see outperformance as long as Wipro lags its peers in growth. We expect mid-single digit earnings growth in the next couple of years.
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