Wipro’s winning streak to continue: Cazenove

MUMBAI: Securities firm Cazenove & Co said it has upgraded the earnings

estimates of software firm Wipro Ltd. by 16 per cent for the current year and 34

per cent for the following year.

In a report dated January 31, Cazenove said it had raised its profit estimate

for Wipro to Rs 6.09 billion ($131.25 million) for the year to March 2001, and

to Rs 10.48 billion for the following year. Its revenue estimates were raised by

six per cent to Rs 29.14 billion for the current year and by 11 per cent to Rs

43.08 billion for the year after.

Cazenove said it maintained its "buy" recommendation on the stock -

with a 12-month price target of Rs 3,300-3,500, up 17.8 per cent to 24.9 per

cent from Monday's close at Rs 2,801.20. In the recent October-December quarter,

Wipro's net profit rose three-fold to Rs 1.89 billion ($40.69 million) from Rs

444 million a year earlier. Cazenove said the growth had beaten its estimate by

20 per cent.

The securities firm said it had raised Wipro's profit estimate mainly because

it expected its software services division Wipro Technologies' contribution to

total revenue to rise to 69 per cent in the next financial year, up from an

earlier estimate of 66 per cent. Cazenove also saw Wipro Technologies doing more

offshore work. It also expected an increase in the profitability of Wipro

Infotech — Wipro’s hardware and domestic information technology services

unit - because of increased service revenue.

Cazenove said it did not expect any slowdown in new orders next year and

expected Wipro's software employees to rise to 13,720 compared to 11,100

estimated earlier. The brokerage now expects Wipro’s billing rates for onsite

projects to increase by more than 20 per cent in the current year, compared to

the earlier estimate of 10 per cent increase.

Wipro's reduced dependence on the American conglomerate GE, which used to be

its biggest client, and readiness to scrap the contract if GE does not hike

billing rates, indicated confidence of getting additional business without

hampering the growth rate, Cazenove said.

(C) Reuters Limited 2001.