Wipro Ltd: Institutional Investors Under Pressure as Holdings Drop 3.9%
Business and Industry Overview:
Wipro Ltd. is a global information technology, consulting, and business process services (BPS) company. It is the 4th largest Indian player in the global IT services industry behind TCS, Infosys, and HCL Technologies. It is based in Bengaluru. It provides IT services, consulting, and business process solutions. The company operates in 167 countries and offers services in cloud computing, cybersecurity, digital transformation, artificial intelligence (AI), robotics, and data analytics. Wipro started in 1945 as Western India Vegetable Products Limited, a cooking oil company. In the 1980s, it expanded into technology and software services. By the 1990s, it had become one of India’s top IT service providers. During the dot-com boom, Wipro was India’s largest company by market value. In 2004, its annual revenue exceeded $1 billion.
The Information Technology (IT) & Business Process Management (BPM) sector plays a crucial role in India’s economy, contributing 7% to the GDP as of FY24. India has one of the largest internet consumer and, at the same time, has the lowest internet costs globally. With this, India is next for the next phase of IT growth. The Digital India Programme has strengthened digital infrastructure and access, driving rapid digital adoption through government initiatives, private sector innovation, and emerging digital applications. These advancements are creating economic value and enhancing citizen empowerment. India’s global standing in innovation has also improved, ranking 40th in the 2022 Global Innovation Index. Hexaware Technologies provides IT services in business process services, digital IT operations, cloud, data & AI, application services, and cybersecurity. The company operates across 50 offices in 19 countries, with a diverse workforce of 90 nationalities and approximately 33% women representation. The company competes with major IT service providers such as Tata Consultancy Services (TCS), Infosys, Wipro, and HCL Technologies. The IT services sector is witnessing rapid digital transformation and increasing demand for AI, cloud computing, and automation.Wipro Limited is a leading technology services and consulting company focused on building innovative solutions that address clients’ most complex digital transformation needs. Leveraging our holistic portfolio of capabilities in consulting, design, engineering, and operations, we help clients realise their boldest ambitions and build future-ready, sustainable businesses. With over 230,000 employees and business partners across 65 countries, THEY deliver on the promise of helping our clients, colleagues, and communities thrive in an ever-changing world.
Over the years, Wipro expanded through many acquisitions. It bought Appirio in 2016, Capco in 2021, and Rizing in 2022. These helped Wipro grow in cloud services, consulting, and enterprise software. Wipro serves industries like finance, healthcare, manufacturing, retail, and telecom. It offers software development, business process management, consulting, engineering, and cloud services. The company focuses on innovation and digital transformation. Wipro is expanding globally while staying connected to its Indian roots.
Latest Stock News:
The Nifty IT index shows the performance of Indian IT stocks. It stayed steady after a big fall. Last week, it fell by 7.96%. This was the biggest drop since March 2020. In this session, it rose by 1.64%. This year, the index has fallen by 13.5%. The drop is because of delays in the industry. Wipro is trading 2.65% higher at Rs 285.00 as compared to its last closing price. Wipro has been trading in the price range of 286.30 & 278.30. Wipro has given -8.02% this year & –11.38 % in the last 5 days. Wipro hasa TTM P/E ratio of 25.44 as compared to the sector P/E of 32.67.
Wipro is investing $200 million in Wipro Ventures to support early- to mid-stage startups. This brings its total investment to $500 million. Wipro Ventures has made 37 investments in 10 years, focusing on IT, cybersecurity, and AI. It invests $1 million to $10 million per startup and helps businesses grow. Some startups, like Tricentis and Avaamo, have benefited Wipro and its clients. Wipro Ventures is also exploring Generative AI but separately from Wipro’s $1 billion AI plan.
Potentials:
Wipro is investing $200 million in its venture arm, Wipro Ventures. This money will help support early- to mid-stage startups. Since 2015, Wipro Ventures has raised money four times. With this new investment, its total funding reaches $500 million. The funds will go to startups that match Wipro’s business goals. Some money will also support startups Wipro has already invested in. Wipro Ventures invests in IT startups and helps them grow. It has made 37 investments in 10 years, with 12 successful exits. It has invested in companies in India, the US, and Israel, mainly in enterprise technology and cybersecurity. Each year, Wipro Ventures makes 3 to 5 investments, usually between $1 million and $10 million per startup. Some of these startups have helped Wipro improve its own operations. For example, Avaamo, a conversational AI company, improved Wipro’s employee experience. Wipro Ventures is also investing in AI (artificial intelligence), especially generative AI (GenAI). It focuses on middleware and small language models (SLMs). However, this AI investment is separate from Wipro’s larger $1 billion AI plan. Some startups Wipro has backed have done very well. One was acquired by Palo Alto Networks in 2019 and became part of its security platform. Another, Tricentis, has grown into a big company in test automation. Wipro has worked with Tricentis for many years and introduced its solutions to many clients. Wipro Ventures continues to support new startups and create partnerships in the IT industry.
Analyst Insights:
- Market capitalisation: ₹ 2,97,968 Cr.
- Current Price: ₹ 285
- 52-Week High/Low:₹ 325 / 208
- P/E Ratio: 24.0
- Dividend Yield: 2.09 %
- Return on Capital Employed (ROCE): 16.9 %
- Return on Equity (ROE): 14.3 %
Wipro is a strong company with good profits. It has a high return on capital (16.9%) and return on equity (14.3%), meaning it uses money well. The company has low debt and strong cash flow, making it financially stable. Its profits and revenue have been growing for the last two quarters. Big investors like foreign funds and mutual funds are buying more shares, which is a good sign.
However, Wipro’s sales growth has been slow (8.75% in 5 years). The stock is expensive, with a high P/E ratio (24), and trades above its book value. Promoters are selling some of their shares, which may be a concern. The company also pays a low dividend (12.2%), so it is not great for income-seeking investors.
For short-term investors, holding the stock is a good idea. Long-term investors can buy when the price is lower. Risk-averse investors may wait for a better time to invest, as the stock is costly right now.