WIPRO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | WIPRO | Market Cap | 2,45,227 Cr. | Current Price | 234 ₹ | High / Low | 324 ₹ |
| Stock P/E | 20.4 | Book Value | 61.5 ₹ | Dividend Yield | 4.70 % | ROCE | 23.0 % |
| ROE | 17.8 % | Face Value | 2.00 ₹ | DMA 50 | 251 ₹ | DMA 200 | 254 ₹ |
| Chg in FII Hold | -0.23 % | Chg in DII Hold | 0.52 % | PAT Qtr | 2,782 Cr. | PAT Prev Qtr | 2,614 Cr. |
| RSI | 34.5 | MACD | -5.92 | Volume | 2,72,51,632 | Avg Vol 1Wk | 1,90,04,620 |
| Low price | 225 ₹ | High price | 324 ₹ | PEG Ratio | -5.10 | Debt to equity | 0.12 |
| 52w Index | 8.68 % | Qtr Profit Var | -2.06 % | EPS | 11.5 ₹ | Industry PE | 24.8 |
📊 Analysis: Wipro Ltd trades at a P/E of 20.4, below the industry average of 24.8, suggesting fair valuation. ROE (17.8%) and ROCE (23.0%) are strong, reflecting efficient capital use. EPS of ₹11.5 is stable, and dividend yield of 4.70% provides attractive income support. Debt-to-equity is low at 0.12, ensuring financial stability. However, PEG ratio is negative (-5.10), indicating weak growth prospects. Quarterly PAT declined slightly (-2.06%), showing muted earnings momentum. Technicals show RSI at 34.5 (oversold) and MACD negative (-5.92), pointing to short-term weakness but potential rebound from lower levels.
💰 Entry Price Zone: Ideal accumulation zone is between ₹225 – ₹235, close to its 52-week low and below DMA50/DMA200, offering margin of safety.
⏳ Exit / Holding Strategy: If already holding, maintain with a long-term horizon (3–5 years) given strong ROE/ROCE and attractive dividend yield. Consider partial profit booking near ₹310 – ₹324 (recent high zone) if earnings growth does not accelerate. Long-term compounding depends on margin expansion and revenue growth in IT services.
Positive
- 💰 Attractive dividend yield (4.70%).
- 📈 Strong ROE (17.8%) and ROCE (23.0%).
- 🏦 Low debt-to-equity (0.12), ensuring financial stability.
- ✅ EPS of ₹11.5 supports earnings base.
Limitation
- ⚠️ PEG ratio (-5.10) indicates weak growth-adjusted valuation.
- 📉 Quarterly PAT decline (-2.06%) shows muted earnings momentum.
- 🔻 Technical weakness (RSI oversold, MACD negative).
Company Negative News
- 📉 Marginal decline in quarterly PAT (₹2,782 Cr vs ₹2,614 Cr).
- 🚫 FII holding reduced (-0.23%), showing reduced foreign investor confidence.
Company Positive News
- ✅ DII stake increased (+0.52%), signaling domestic institutional support.
- 💡 Stable dividend payout policy supports investor returns.
Industry
- 🏭 IT services industry PE ~24.8, slightly higher than Wipro’s valuation.
- 🌍 Sector growth driven by digital transformation, cloud adoption, and global outsourcing demand.
Conclusion
Wipro is financially strong with high ROE/ROCE, low debt, and attractive dividend yield, making it a reasonable candidate for long-term investment. However, growth prospects remain muted, as reflected in negative PEG and weak earnings momentum. Ideal entry is near ₹225–₹235 for margin of safety. Existing holders should maintain positions but consider partial exit near ₹310–₹324 unless profitability improves. The stock suits income-focused investors with valuation discipline.
Selva, would you like me to extend this into a peer benchmarking overlay (Wipro vs Infosys, TCS, HCL Tech, etc.) so you can evaluate sector rotation and compounding potential more clearly?