Business News
Wipro top gainer in Sensex, after divesting hosted data services business
Shares of IT major Wipro rose over 2% and was the top gainer on Thursday’s trading, after its decision to sell its hosted data services business to Ensono for $405 million.
Wipro shares were trading at ₹. 298.70 on BSE in early trading and was the top gainer among Sensex firms.
The deal would be marginally accretive to earnings per share of Wipro, brokerage Kotak Institutional Equities has said.
The research firm also noted that Wipro had acquired Infocrossing in 2007 for $600 million and nearly two-third of the business was hosted data center management. However, the acquisition failed to generate expected synergies, as implied revenue from the hosted data center business has been modest mid-single digit from 2007-2018, with single digit operating margin for Wipro, it noted.
“The good part is Wipro is taking a critical view of the portfolio and is not afraid to divest businesses that may not be strategic in future,” Kotak Institutional Equities noted.
However, the research firm said it is cautious on the stock and expects Wipro to underperform industry on revenue growth due to challenges in a few a verticals such as Communications and Energy and Utilities, among other factors.
