Nomura Financial Advisory and Securities has retained 'Neutral' on Wipro with revised target price of Rs 600 from Rs 590 as against current market price (CMP) of Rs 586 in its report.

Commenting on the investment rationale, Nomura said, ''Wipro's weak 1Q revenue growth guidance of -0.3% to +2% q-q leads us to cut our FY15F USD revenue growth forecast to 10% (vs growth in line with the expected industry average of 13% earlier) and is likely to temper street expectations. While management commentary was optimistic on growth improving from 2Q onwards, we believe our 3.2% CQGR estimate over 2Q-4QFY15F captures this optimism. We expect Wipro to continue to lag peers like HCL Technologies, TCS and Cognizant with a revenue CAGR of 11% over FY14-16F, vs 15-18% at its peers. Valuation of 15x FY16F EPS, a 10% premium over Infosys with similar growth, leaves limited upside, in our view.

Wipro's 4Q was marginally below on USD revenue growth at 2.5% q-q (vs our 3% q-q est.), while margin performance was impressive with 150bp q-q and 430bp y-y improvement to 24.5% (vs our est. of a 50bp q-q decline). Growth was broad-based; Wipro signed the highest deal flow in 4Q and posted the best growth vs peers in its largest geography (US) at 2.7% q-q (vs <1% q-q at peers). The key disappointment was weak 1QFY15F USD revenue growth guidance of -0.3 to +2% q-q (vs our est. of +1.5-3.5%) driven by weakness in Retail and seasonality impact in India. 

We cut revenue growth by 1pp to an 11% CAGR over FY14-16F; for FY15/16F, we lift our margin estimates by 70bps each and EPS is largely unchanged at Rs 36/40. Our TP is based on 15x FY16F EPS (unchanged). Slower growth and weaker positioning vs peers will likely limit re-rating for Wipro. We prefer HCL Technologies/TCS among tier-1 IT.''

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