Wipro Shares Bleed For 5-Days In Row, Slips Over 6%; Why Senior Employees Exit Is Concerning?

Wipro share prices have been bleeding for five consecutive days, tumbling by over 6% during these sessions. Wipro shares have already been under pressure since last week, and the surprise exit of CFO Jatin Dalal further added to their woes. On Monday, the tech giant's share price dropped by over 1.2% with an intraday low of Rs 413.60 apiece on BSE. It will be keenly watched if Wipro breaks its critical Rs 400 mark this week.

According to Kotak Institutional Equities report, the loss of key leaders continuing into the fourth year of turnaround will not be viewed favorably by investors.

At the time of writing, Wipro shares traded at Rs 414.70 apiece, near its intraday low, and down by 0.9% on BSE. Its market cap is around Rs 2,16,545.97 crore.

Wipro shares have been in red since September 18. So far in 5 trading sessions, the stock has tumbled by at least 6.23% on BSE. In the trading week that ended on September 15, the stock was a little over Rs 440 levels.

Last week, Wipro announced that chief financial officer Jatin Pravinchandra Dalal has tendered his resignation from his post citing plans to pursue professional goals outside the organisation. With Dalal's exit, the IT player appointed Aparna Iyer as the successor.

Iyer takes charge as CFO with effect from September 22, 2023, while Dalal's last day in the organisation will be November 30, 2023.

Aparna Iyer is an accomplished and results-driven leader. As per Kotak, she has good credentials and has worked in multiple roles at Wipro in the last 20 years.

A qualified CA and gold medalist of the 2002 batch, Aparna in a career spanning 20 years, has played several leadership roles covering the breadth & depth of finance, ranging from Internal Audit, Business Finance, Financial Planning & Analytics and Corporate Treasury & Investor Relations. More recently, she was appointed as CFO of Wipro's FullStride Cloud Global Business Line, with the intent of deepening her expertise as future CFO. She has deep expertise in financial risk management, capital allocation, fundraising, and driving business strategy and growth.

But the real concern with Wipro is the frequent exit of senior-level personnel in the past 12 months.

In its research note, brokerage Kotak said, quite a few senior management personnel have quit Wipro in the past 9-12 months. Jatin's exit adds to the list. Adding, it said, some of the changes may have been necessary to check underperformance. However, the loss of key leaders continuing into the fourth year of turnaround will not be viewed favorably.

Hence, on valuation, Kotak said, "Wipro is struggling in its turnaround effort, has a weak mega deal pipeline and is vulnerable to vendor consolidation. We expect the company to underperform peers on growth in FY2024E and in the medium term. The low-growth characteristics justify its inexpensive valuations. We value Wipro at 15X September 2025E earnings at a Fair Value of Rs405. Retain a cautious stance on the company and reiterate REDUCE."

As of June 30, 2023, Wipro's headcount stood at 249,758 employees, which came after a few layoffs. The company's headcount stood at 258,570 employees in the March 2023 quarter, and 258,570 employees by the end of the June 2022 quarter. However, voluntary attrition has continued to moderate to 17.3% in Q1FY24 versus 19.4% each of Q4FY23 and Q1FY23.

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