Under Wipro’s exchange, Delaporte will be relieved of his duties as CEO on May 31, 2024. His tenure as CEO will end in July 2025.
Srinivas Pallia will succeed him as the new MD and CEO of Wipro. Pallia, who was the CEO of the company’s Americas region, will take over as the new CEO and MD from April 7, 2024, for five years.
Also Read: Wipro MD Thierry Delaporte resigns, Srinivas Pallia to succeed as CEO
Wipro’s share price fell more than a percent in the intraday trade on Monday, April 8. It, however, pared losses and traded around 0.42 percent down at ₹483 on NSE around 12:10 pm
Over the last year, Wipro’s share price has gained about 29 percent, mostly in sync with the equity benchmark Nifty 50, but outperforming the Nifty IT index, which has gained about 21 percent in the last year.
Also Read: Wipro share price rises 121% during Thierry Delaporte’s tenure, revenues up 47% in last 14 quarters.
The way forward for Wipro
Delaporte’s departure from Wipro, ahead of his planned tenure, signals a significant change for the company. Experts say the challenges for the new CEO are daunting, but it is too early to predict how this transition will affect the company and what it means for investors. In the short term, the stock is expected to remain subdued.
Also Read: Srinivas Pallia takes over as Wipro’s new CEO: 10 interesting facts to know about Thierry Delaporte’s successor
As reported by CNBC-TV18, Morgan Stanley finds the announcement of the exit of the CEO a surprise to the market, since his tenure was expected to last until July 2025.
Morgan Stanley, as reported by CNBC-TV18, anticipates that the transition may initially introduce uncertainty before paving the way for a promising potential turnaround.
Also Read: Phone call, discussion and firing: Behind Delaporte’s Wipro exit
According to Nirmal Bang Equities, Wipro’s near-term growth trajectory will be significantly influenced by external demand conditions while its consulting unit may act as a drag.
Moreover, the brokerage firm believes that the test for Srini Pallia would be how Wipro stacks up against its peers when demand normalizes.
“Srini Pallia needs to put the blocks in place now to see that Wipro gets up and running quickly as soon as demand picks up. We think both investors and promoters would give him three years to deliver even though his tenure was fixed at five years,” said Nirmal. Bang.
Also Read: Thierry Delaporte steps down as Wipro CEO and MD, all you need to know about India’s highest paid CEO in FY23
On the other hand, Dipeshkumar Mehta, senior research analyst at Emkay Global Financial Services, believes that Srini’s appointment will confirm a smooth transition and support current growth strategies with only a little tweaking to ensure better execution.
“Srini will find him in action from day one as the company faces challenges in addition to broader industry headwinds such as muted demand, weak discretionary spending, Gen AI disruptions, uncertain macros and uncertainties linked to an election year in key markets,” Mehta said. .
Dhruv Mudaraddi, research analyst at StoxBox said despite the stock’s commendable performance during Delaporte’s tenure, Wipro faced challenges with its operating model changes, high-level departures and expensive acquisitions that failed to deliver expected growth.
However, the appointment of Pallia as the new CEO and MD brings optimism for Wipro’s business performance.
Mudaraddi pointed out that as a seasoned Wipro veteran with over three decades of experience, Pallia brings a deep understanding of the company’s operations, values and culture. His success story as the CEO of the American region of Wipro underlines his ability to navigate difficult environments and deliver results.
“Pallia’s promotion signifies a return to Wipro’s core values and culture, emphasizing a customer-centric approach, a growth mindset and a strong execution focus. His inside perspective positions him well to build on Delaporte’s initiatives, leveraging successful strategies and addressing areas that require improvement,” Mudarddi said.
CA Vatsal Vinchhi, Equity Analyst – IT sector, Choice Equity Broking predicts that the market’s response to the resignation of Wipro CEO Thierry Delaporte could be negative as he resigned a year before the end of his term amid the underperformance and significant top level of the company. exits during FY23.
Vinchhi said the new CEO will face a challenging environment marked by industry headwinds such as weak demand and weak discretionary spending. However, despite these challenges, his emphasis on diversifying into different industry sectors and his implementation of various growth strategies are expected to facilitate a smoother transition beneficial to the company and shareholders in the long term.
What should investors do?
Experts have mixed views on Wipro. While some of them find it a decent buy in the long run, some have negative views on the stock.
Mudaraddi pointed out that Wipro looks poised to enter a new chapter of growth and profitability under Pallia’s leadership, capitalizing on its commendable track record and ability to ensure efficiency despite adverse conditions in its region.
He remains positive on Wipro’s long-term growth picture and recommends that investors hold the stock and also consider a buy-on-less strategy.
Also Read: Stocks to buy: HUL, BEL, IDFC First Bank among 12 stocks that can rise 8-15% in next 3-4 weeks, say analysts.
Brokerage firm Nirmal Bang maintains a sell call on the stock with a target price of ₹441 while Emkay Global maintained its ratings as it awaits more clarity on the leadership transition. Emkay maintained an “add” call on the stock with a target price of ₹500 at 19 times its Mar-26E EPS (earnings per share).
Morgan Stanley has an “underweight” view on the stock with a target price of ₹450, reported CNBC-TV18.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and second-hand companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 08 Apr 2024, 12:39 IST