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Prospects in Wipro

The company has sound fundamentals and there is no need to panic sell

Wipro’s less than impressive third-quarter results and the fact that the scrip price has been on the decline for some time now is making me wonder if I should retain this stock. What should I do?
- Radhakrishna Reddy

Wipro’s performance in the third quarter was subdued in comparison to that of its peers, Infosys and TCS. However, the scrip had outperformed the key index in the last two months as it was expected to put up a good show in the October-December quarter. When those expectations were not met, the stock fell.

The company has also initiated a change in management. That could also put pressure on the scrip price in the near term.

However, as you are perhaps aware, we had analysed the stock in our January issue and had recommended a buy on it. The company’s long-term track record is good: five-year EPS growth exceeds 20 per cent; three-year average return on capital employed (RoCE) exceeds 25 per cent. The company’s fundamentals continue to be sound. There is really no need to panic based on the result of just one quarter. If you have a long-term investment horizon, hold on to the scrip.

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