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Buy Wipro and BHEL – Kotak Securities

June 22, 2007

Kotak Securities has maintained an Outperform rating on Wipro and recommended a BUY with a March 2009 DCF price target of Rs 655. [Not March 2008, its 2009 earnings on Discount Cash Flow Model]

  • FY2008 organic revenue growth will likely be higher than FY2007
  • Jun’ 07 quarter guidance may be conservative, expect further acceleration from Sep’ 07 quarter
  • SEZ ramp ups progressing well, FY2010 tax impact would be the least on Wipro
  • Kotak forecasts an EBIT margin decline of 60bps for Wipro’s Global IT business in FY2008 to 23.8%.

Kotak maintains Outperform rating with an end-March 2009 DCF based target price of Rs655/ share. Kotak assume Re/US$ rate of 42 for FY2008, 42 for FY2009 and 41 for FY2010. Wipro is expected to report an EPS of Rs 24.3, Rs 30.4 and Rs 33.4 for Fy2008, 2009 and 2010

Dalal Street Research Analyst Update:
Indian Rupee is expected to average Rs 41 for FY2008 though Citigroup has pegged it at Rs 40.

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