Analysts' corner

Wipro & Greaves Cotton Ltd

WIPRO
Reco price/date: Rs 522/December 19;
Current/target price: Rs 529.90/Rs 620
Wipro's non-top-10 client growth sluggishness, the key reason for its revenue underperformance vis-à-vis TCS, could change for the better. The account mining strategy through assigning client engagement managers to Mega and Gamma accounts has delivered good results within the Top-10 and hold substantive potential for the non-top 10 accounts as well. We also anticipate improved new account traction led by BFSI and Europe. In a recent meeting with the company, we felt that it is upbeat on encouraging revenue traction next year compared to FY14. We revise our estimates marginally and they remain higher than consensus. We maintain Buy on Wipro, with a revised target price.

-centrum broking

GREAVES COTTON LTD
Reco price/date: Rs 65/December 19;
Current/target price: Rs 65.50/Rs 80
In our interaction with the management of Greaves Cotton, the company indicated its earnings are bearing the brunt of slowdown in the automotive and infrastructure equipment market. To mitigate the ongoing slowdown,the company is focusing on product addition and cost management. The company is also exploring markets in West Asia, Southeast Asia and Africa. In the near term, weak economic activity is leading to stagnation in earnings. Nonetheless, valuations are reasonable at PE of 9.7x and EV/Ebitda of 5.1x. Plus, return ratios remain healthy even in the current environment, underscoring the strength of the business. We maintain buy.

-Kotak Securities Ltd