Wipro Ltd wins large IMS deal :: IndiaNivesh

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Wipro Ltd wins large IMS deal
According to media sources, Wipro Ltd (Wipro) won $400 mn multi-year
infrastructure management services (IMS) contract from ABB, Zurich.
As per the deal Wipro will manage back-end technology alongwith cloud offering
by moving lot of business applications on cloud.
As per the source the contract is for the five years.
Our take
We do not see any material impact of this deal on the company’s overall financials
as deal is likely to contribute ~Rs.4960 mn (1.04% of annual sales) /Rs.694 mn to
the annual revenue and net profit. This implies that the incremental EPS would be
Rs.0.33 to the annual estimated EPS of Rs.32.1 (FY15E).
However, deal win clearly strengthens our view that Wipro’s initiative to capture
large size deals post re-organization have started materializing well.
Valuations
At CMP of Rs.541, the stock is trading at P/E multiple of 16.3x FY15E and 14.3x
FY16E earnings estimate. Wipro’s re-organization to reduce overlaps, improve deals
flow, and deploy automation initiatives delivered marginal improvement on revenue
growth and EBITDA expansion front. The uptake in discretionary budget and revival
in global economy could lead to outperformance going-ahead. We maintain HOLD
with target price of Rs.611 [valuing at 16.5x FY16e] on Wipro.