Wipro trading below 37% from its all-time high price: Is it Time to Buy?

Wipro Ltd is a global information technology, consulting, and business process services (BPS) company. It is the fourth largest Indian player in the global IT services industry, behind TCS, Infosys, and HCL Technologies.

The company was incorporated on 29 December 1945 in Amalner, India, by Mohamed Premji. In 1966, after Mohamed Premji’s death, his son Azim Premji took over Wipro as its chairperson at the age of 21. During the 1970s and 1980s, the company shifted its focus to new opportunities in the IT and computing industry, which were at a nascent stage in India at the time.

The question probably intrigues you: should you buy Wipro here when the stocks are trading at around 37% below its all-time high price and when the IT space is in the limelight today? Moreover, the company will be announcing its quarterly results today post-market. However, the two Indian IT giants have reported good financials above market expectations, which can be identified in their strong price momentum where Infosys and TCS are trading high, up by 7.8% and 4.05% from their last day’s closing price. Some factors one should consider before buying Wipro’s stock.

Wipro’s Stocks Performance

At the beginning of the day, the stock started trading at Rs 454.55 per share, higher compared to the last day’s closing price of Rs 448 on the BSE. As of writing this article, it is trading at Rs 465.60 per share, which is 3.92%, with intraday highs of Rs 469 and lows of Rs 454.55. However, the stock is still trading 4% below its 52-week high price of Rs 483.40 on the BSE. Additionally, the stock has generated a mere 10% return in the last month and 18% in the last year.

Investment Horizon

The first question one should ask is when you are going to hold the shares if bought at this level. If you plan to buy and hold for the long term, it might not be a concern considering buying at these levels. The future of IT seems promising, and if it holds true, IT stocks will likely boom in the future. One strategy that can be used here is bifurcating the projected investment into parts and deploying the capital over a period of time when it starts performing or reporting a good quarterly result.

Is Wipro outperforming the Benchmark indices or its peers?

The NSE IT index has generated a return of 27% in the last one year, whereas the shares of Wipro Limited have delivered a mere 10% return in the same period, indicating that it has failed to outperform its benchmark index. It has also failed to outperform the Nifty50 index during the same period.

Among peers or constituents of the IT index, except for Infosys and TCS, which have gained less than Wipro in the last one year, the remaining seven stocks have showcased good performance. 

Is there any better alternative available? 

If there were better alternatives available, I would say yes, especially in the same space. Many stocks in the IT index are trading at their all-time high levels. There are 10 stocks available in the IT index, and Wipro is the stock trading around 37% down from its all-time high price. Even out of this index, many IT stocks from the mid-cap and small-cap space are trading at their all-time high levels, even when the IT sector has not performed well overall. For example, Birla Soft, Sonata Software Cyient Limited and so on.

Fundamentals Comparison: 

Want to trade the Result? 

It will be akin to a Zero Hero trade if you want to trade the result impact. It could yield a good profit on the next trading day, or conversely, it can lead to a significant loss if the company announces results that do not meet market expectations. Even if you buy the stocks at today’s low price while keeping a stop loss, if the stock opens with a gap down below today’s low price in the next trading session, your stop loss may not trigger and could leave you disappointed.

Conclusion: 

We hope you can now judge your decision better, whether to go for buying the shares of Wipro or some other stocks. One should keep in mind that wherever investors are investing, it should belong to a trending sector or industry and should outperform both the benchmark index and its peers. If these conditions are met, the stock will surely be a performer in your portfolio.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.