WIPRO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 18 Dec 25, 02:55 pm

Fundamental Rating: 4.1

📊 Core Financials: Wipro demonstrates solid fundamentals with quarterly PAT at 2,614 Cr, though down from 3,696 Cr (-4.75% variation). Profit margins remain healthy, supported by ROCE at 23.0% and ROE at 17.8%, reflecting efficient capital usage. Debt-to-equity ratio of 0.12 indicates low leverage, ensuring financial stability. Cash flows are consistent, backed by scale and diversified IT services.

💹 Valuation Indicators: Current P/E of 22.8 is below industry average (26.1), suggesting relative undervaluation. P/B ratio ~4.2 (261 ÷ 61.5) reflects premium pricing but justified by strong returns. PEG ratio of -5.69 highlights weak growth prospects relative to valuation. Intrinsic value appears close to current price, offering moderate margin of safety.

🏢 Business Model & Competitive Advantage: Wipro operates in IT services and consulting, with diversified offerings across digital, cloud, and engineering. Competitive advantage lies in global delivery capabilities, strong client relationships, and sectoral diversification. Overall health is strong, though growth momentum has slowed compared to peers.

🎯 Entry Zone Recommendation: Attractive entry zone lies near 240–250 ₹ (close to DMA 50 and DMA 200). Current price (261 ₹) is slightly above fair accumulation zone; better to accumulate on dips.

📈 Long-Term Holding Guidance: Suitable for long-term compounding given strong ROCE/ROE, low debt, and dividend yield (2.28%). Investors should accumulate gradually during corrections to mitigate valuation risk.

Positive

• 📈 Strong ROCE (23.0%) and ROE (17.8%) indicate efficient capital usage
• 💰 Low debt-to-equity (0.12), ensuring financial safety
• 🏭 Diversified IT services portfolio with global presence
• 📊 Dividend yield of 2.28% adds investor support
• 💹 FII (+0.29%) and DII (+0.08%) holdings increased

Limitation

• ⚠️ Quarterly PAT declined (-4.75% variation)
• 📉 PEG ratio (-5.69) highlights weak growth prospects
• 📊 P/B ratio ~4.2 reflects premium pricing

Company Negative News

• 📉 Decline in quarterly profits (3,696 Cr → 2,614 Cr)
• ⚠️ Growth momentum slower compared to peers

Company Positive News

• 📈 Strong return metrics (ROCE 23.0%, ROE 17.8%)
• 💹 Institutional investor confidence with FII and DII holdings increasing

Industry

• 🏭 Industry P/E at 26.1, slightly higher than Wipro’s valuation
• 📊 IT services sector remains resilient with demand for digital and cloud transformation

Conclusion

✅ Wipro is fundamentally strong with efficient return ratios, low debt, and consistent dividend yield. While growth momentum has slowed, valuations remain fair compared to industry averages. Best strategy: accumulate near 240–250 ₹ for margin of safety. Long-term holding is viable for compounding, supported by sectoral demand and diversified business model.

Would you like me to extend this into a peer benchmarking overlay comparing Wipro against other IT service leaders like Infosys and TCS, or a basket scan highlighting undervalued peers for sector rotation?