Wipro – Nifty’s worst performer in 2022

Once the darling of investors, shares of IT major Wipro have cracked 47 percent this year, making it the worst Nifty performer in 2022, says an article published by the Economic Times.

The large-cap IT major has given the worst returns since the 2008 global financial crisis when it tanked 55 percent and the stock will once again end in the red after two years of double-digit gains.

According to the writer, geopolitical risks – the Russia-Ukraine conflict, recession worries, concerns around margins after acquisitions like Capco and Rizing, and disappointing quarterly results – have dampened the outlook for the stock.

He says the stock market has been obsessed with high-growth tech companies whether in India or the US – until it’s suddenly not. And when the mood changes, as it did this year, the unrelenting brutality is there for the world to see.

“Though India remained resilient through the global rout and recouped losses in most sectors, including tech, this significant underperformance from prominent IT names has caused a lasting dent on Dalal Street. The Nifty IT index has emerged as the worst-performing sectoral index in the calendar year 2022. This decline comes after five straight years of annual gains.”

“The reason why Wipro has done worse than peers is that the guidance they gave was comparatively weaker than others,” said Kranthi Bathini, equity strategist at WealthMills Securities.

The company gave a revenue growth guidance of 0.2 percent for the October-December quarter, much lower than expectations, on the back of macro uncertainty and geopolitical issues.

Historically, Wipro had been a high-beta stock when compared to top tech names and that is one of the reasons it was underperforming.

This brutal year for tech biggies is now drawing to a close with little conviction that the outlook is brightening anytime soon.

“We remain cautiously optimistic about the sector. In our view, stock price appreciation in the forthcoming quarters will broadly be a factor of earnings growth as we see limited opportunities of rerating in the industry,” said HDFC NSE -0.81 % Securities.

Jefferies expects revenue growth for Indian IT services firms to moderate by 250 bps to 7% in CY23/FY24 due to a tightening of client budgets, reprioritisation of tech spending and delayed decision-making amidst an uncertain macro environment.

The story was filed by the News Desk. The Desk can be reached at info@thecorrespondent.com.pk.

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