Should You Buy, Sell Or Hold HDFC Bank & Wipro Stock?

Here's what Emkay Global has recommended to do post the quarterly numbers of HDFC Bank and Wipro. The brokerage has a buy call on Wipro and HDFC Bank post the quarterly numbers. Take a look.

Wipro: Margins above estimates

According to Emkay Global, Wipro posted mixed operating performance in Q3. Margins came in above estimates, while Q3 revenue and Q4 growth guidance missed our expectations. "Revenue growth in Q3 was impacted by furloughs, softness in discretionary spending, and delay in deal ramp-ups and revenue conversion because of macro uncertainties. Management highlighted pockets of weakness in retail, particularly in America, and technology verticals. Management remains cautiously optimistic about growth prospects and is closely monitoring the possible impact of macro uncertainties on demand and revenue conversion," the brokerage has said.

Wipro: buy the stock with a price target of Rs 470

According to Emkay Gobal, Wipro reported a strong overall deal win TCV of USD4.3bn (up 26% YoY; includes 11 large deals with combined TCV of >USD1bn) translating into a book-to-bill ratio of ~1.5x. "Wipro has guided -0.6% to 1% QoQ CC revenue growth in IT services for Q4, below our estimates, factoring in softness in discretionary spending and slower revenue conversion due to prevailing macro uncertainties. IT services' EBITM grew 120bps to 16.3% in Q3, 80bps above our expectations, and is likely to serve as a base for margins and gradual improvement. We cut our earnings by <1% for FY23E-25E post Q3 performance. We maintain BUY with a target price of Rs 470 at 17x Dec-24E EPS," the brokerage has said.

HDFC Bank: Strong deposit growth

According to Emkay Global, HDFC Bank remains one of the few banks to clock a strong deposit growth amid rising competition for deposits, given its robust franchisee. On the credit front, HDFC Bank remains opportunistic on the corporate side; thus, we are not too worried about the 3Q growth moderation. Bank continues to clock strong growth in the retail/SME segment which we believe should support its margins amid rising cost pressure.

"The merger process is on the fast track, with shareholder approval now in place; the bank is hopeful of it being completed earlier than guided. That said, clarity on the stake of HDFC Life and other subsidiaries as well as on the merger structure by the RBI remains elusive," Emkay has said in its report.

HDFC Bank: Buy with a price target of Rs 1925

"Not withstanding the merger-related regulatory overhang, we believe HDFC Bank offers the best play on India's consumption story and is also a good defensive bet in current choppy waters. The stock is trading at reasonable valuations, at 2.6x FY24E ABV. We retain our long-term BUY, with a revised target price of Rs 1,925 per share (valuing the core bank at 2.8x Dec-24E ABV) and a subs valuation of Rs 78 per share," the brokerage has said.