2 Nifty IT Stocks To Buy That Have Dropped 35% To 40% From Highs
Volatility in the markets is at its peak, possibly something that we have not seen in the last 1-year. Some Nifty stocks have crashing down. Here are 2 Nifty stocks, which have fallen 35% to 40% from 52-week highs.
Wipro: Should you buy the stock after the 38% fall?
Current market price | 52-week high | Fall % |
---|---|---|
459 | 739 | 37.89% |
The stock of Wipro has been one of the worst performers from the Nifty pack and the stock is down nearly 38% from 52-week highs. There are two things that investors remain worried about. The first is the growth at the company and the second is the problems that the IT industry could face going ahead. Let's address the first issue. There are worries that a faster than expected interest rate hike in the US would lead to recession, which in turn could impact spendi
Does Wipro shares look attractive to buy?
After the 38% fall in the shares of Wipro from 52-week highs, there is no doubt that there is some value in the stock. Let's take a look at the Financials of the company for the fourth quarter first. Gross Revenue was Rs 208.6 billion ($2.7 billion), an increase of 28.4% YoY. However, IT Services Segment Revenue was at $2,721.7 million, an increase of 3.1% QoQ and 26.4% YoY. Now, the management expects revenue from its IT Services business to be in the range of $2,748 million to $2,803 million for the June quarter. This translates to a sequential growth of 1% to 3%. The problem that analysts seem to be having is the tepid growth that has been happening at the company. The markets are obsessed only with growth at the moment and if that if small, the stock is pounded. Nonetheless, we believe that after the fall in the stock price, Wipro shares are attractive and investors can buy.
Tech Mahindra
Current market price | 52-week high | Fall % |
---|---|---|
1834 | 1138 | 37.95% |
The fall in the stock of Tech Mahindra is almost the same like Wipro. However, again, fundamentally, the stock did not merit such a solid 52-week high. So, the fall in the stock is not surprising. However, the fall in the stock has made it an attractive buy. In fact, Geojit says that it remains positive on company's business outlook on the back of strong new deal wins, deal pipeline and capabilities in new tech. we expect the margin pressure led by supply side issues to subside in the coming quarters, supported by the higher fresher intakes. "We foresee earnings to grow at a healthy 13% CAGR over FY22-24E and reiterate our buy rating on the stock with a revised target price of Rs. 1,372 using a target multiple of 17x P/E on FY24E Adjusted EPS," the firm noted in its report recently.
Buy in small quantities only
If you are looking to buy into Wipro and Tech Mahindra, we would suggest buy only small quantities. Infosys could be a much better bet on various parameters, including dividend yields. We do not expect growth to be solid for Wipro and Tech Mahindra, but, marginal growth rates. Also, worries of a recession in the US, if it really happens could have an impact on the IT sector, which has had a solid run in the last 2-3 years. Overall, the simple suggestion is t buy small quantities, without getting over exposed to both the stocks. Also, do remember markets are very volatile at the moment.