As Wipro reports a profit decline, should you buy or sell stock?

Whether to buy or sell Wipro shares after it has reported a decline in profits

Wipro reports a decline in its profit

After the second quarter of the financial year 2022-23 closed on 30th September 2022, companies are publishing their quarterly results. The results shed light on the companies’ performance during the quarter compared to the second quarter of the last year.

Wipro, an IT services company, also declared its quarterly results on 12th October 2022. The highlights of the results are as follows –

  • The consolidated net profit fell by 9.27% on a year-to-year basis. The reported net profit stood at Rs.2659 crores.
  • Revenue from operations grew 14.60% YoY and stood at Rs.22,539.7 crores.
  • The company’s top five clients grew by 19% on a YoY basis, while the top 10 clients grew by 17% YoY.
  • The operating margin of Wipro jumped 16 basis points over the July-August-September quarter to stand at 15.1%.

Moreover, Wipro declared that it expects its revenue to grow by another 0.5% to 2% in the remaining half of 2022.

Now that the company’s financial results have been made public, investors are wondering whether to invest in Wipro’s stocks or cut their losses and sell off any existing holdings. What do you think?

Buy or sell – What do the experts say?

When it comes to trading in Wipro’s stocks, different experts have different calls. Here’s what experts believe and expect from Wipro’s shares –

  • If you are an existing investor, you might see a short-term weakening in the stock prices as the recovery of the margin would be slow but steady.
  • According to some experts, the third quarter does not present a very bright profitability prospect, and the Earnings Per Share (EPS) might fall. This is because the company has forecasted weak growth in its revenue. As such, many have taken a neutral call on the performance of Wipro’s stocks.
  • Some believe that the stock might outperform the market even though the profits declined in the second quarter. The market valuations show a positive outlook on the stock, and prices might increase in the future. As such, according to some experts, buying Wipro stocks might be fruitful.

Buy or sell – What should you do?

While most analysts have taken a neutral stand, some believe that stock prices might rise in the future. Your call, however, depends on your risk-taking ability and investment horizon.

If you are investing with a long-term investment horizon, you can buy or stay invested in Wipro stocks. The stock prices might rise in the future when you can sell them off and book profits.

On the other hand, if you are an intraday trader or have a short-term prospect, you need to keep an eye out for the regular movement of the stock price. If the price consistently falls, you can sell and cut your losses. Alternatively, you can avoid investing in the stock altogether to cut down the risks of capital erosion and choose other stocks with good profit potential.

Related - Find out how a recession in the US will impact the Indian IT sector

The bottom line

Wipro is a leading IT company which has various achievements to boast of and a large and stable client base. So, though the company has reported a decline in profits, it has posted a profit nonetheless. So, for long-term investments, Wipro can be a good addition to your portfolio. However, you should take trading decisions based on your investment strategy, risk profile and investment horizon.

So, assess your needs and then make an informed choice.

Related - Wipro, TCS or Infosys - How do you choose the best IT stock?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

After the second quarter of the financial year 2022-23 closed on 30th September 2022, companies are publishing their quarterly results. The results shed light on the companies’ performance during the quarter compared to the second quarter of the last year.

Wipro, an IT services company, also declared its quarterly results on 12th October 2022. The highlights of the results are as follows –

  • The consolidated net profit fell by 9.27% on a year-to-year basis. The reported net profit stood at Rs.2659 crores.
  • Revenue from operations grew 14.60% YoY and stood at Rs.22,539.7 crores.
  • The company’s top five clients grew by 19% on a YoY basis, while the top 10 clients grew by 17% YoY.
  • The operating margin of Wipro jumped 16 basis points over the July-August-September quarter to stand at 15.1%.

Moreover, Wipro declared that it expects its revenue to grow by another 0.5% to 2% in the remaining half of 2022.

Now that the company’s financial results have been made public, investors are wondering whether to invest in Wipro’s stocks or cut their losses and sell off any existing holdings. What do you think?

Buy or sell – What do the experts say?

When it comes to trading in Wipro’s stocks, different experts have different calls. Here’s what experts believe and expect from Wipro’s shares –

  • If you are an existing investor, you might see a short-term weakening in the stock prices as the recovery of the margin would be slow but steady.
  • According to some experts, the third quarter does not present a very bright profitability prospect, and the Earnings Per Share (EPS) might fall. This is because the company has forecasted weak growth in its revenue. As such, many have taken a neutral call on the performance of Wipro’s stocks.
  • Some believe that the stock might outperform the market even though the profits declined in the second quarter. The market valuations show a positive outlook on the stock, and prices might increase in the future. As such, according to some experts, buying Wipro stocks might be fruitful.

Buy or sell – What should you do?

While most analysts have taken a neutral stand, some believe that stock prices might rise in the future. Your call, however, depends on your risk-taking ability and investment horizon.

If you are investing with a long-term investment horizon, you can buy or stay invested in Wipro stocks. The stock prices might rise in the future when you can sell them off and book profits.

On the other hand, if you are an intraday trader or have a short-term prospect, you need to keep an eye out for the regular movement of the stock price. If the price consistently falls, you can sell and cut your losses. Alternatively, you can avoid investing in the stock altogether to cut down the risks of capital erosion and choose other stocks with good profit potential.

Related - Find out how a recession in the US will impact the Indian IT sector

The bottom line

Wipro is a leading IT company which has various achievements to boast of and a large and stable client base. So, though the company has reported a decline in profits, it has posted a profit nonetheless. So, for long-term investments, Wipro can be a good addition to your portfolio. However, you should take trading decisions based on your investment strategy, risk profile and investment horizon.

So, assess your needs and then make an informed choice.

Related - Wipro, TCS or Infosys - How do you choose the best IT stock?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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