India's Wipro tanks after Q1 results flag growth concerns

BENGALURU (Reuters) - Wipro’s shares dropped the most in over four years on Monday morning as investors punished India’s no. 4 IT services firm for posting poor growth when its rivals talked of a return of client spending and reported strong results.

 

Shares of the company were down about 8% as of 10:46 a.m. IST, weighing on the Nifty IT index, which was down 0.3%.

 

Wipro on Friday reported a drop in June quarter revenue and forecast IT services revenue in the current quarter to range between a drop of 1% to an increase of 1%.     

 

Tata Consultancy Services, Infosys and HCLTech posted strong results, raising hopes of a demand recovery in the $254 billion sector.

 

At least six analysts cut their ratings on Wipro’s stock since Friday’s results, while three have cut their target price, per LSEG data.

 

Wipro’s deal wins fell 11% from last year while Infosys, which gives number of bookings above $50 million, said its contract wins jumped 78% from last year. 

 

Wipro’s broad-based revenue pressures, muted guidance and weak deal wins suggest that growth remains a challenge for Wipro, analysts at Jefferies said in a note to clients, while those at Morgan Stanley said they expect Wipro to continue underperforming its peers in the near future.

 

(Reporting by Kashish Tandon in Bengaluru; Editing by Nivedita Bhattacharjee)