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Explained: Why Wipro share fell 4% post IT firm’s largest acquisition ever

The share slipped 4 percent to Rs 421.30 against the previous close of Rs 438.80 on the National stock exchange. The stock has fallen after 4 days of consecutive gain.  The market cap of the firm fell to Rs 2.31 lakh crore. 

By Newsd
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Explained: Why Wipro share fell 4% post IT firm’s largest acquisition ever

India’s IT giant Wipro’s share declined 4 percent today after the company acquired London-headquartered management and technology consultancy company Capco for USD1.45 billion. 

The share slipped 4 percent to Rs 421.30 against the previous close of Rs 438.80 on the National stock exchange. The stock has fallen after 4 days of consecutive gain.  The market cap of the firm fell to Rs 2.31 lakh crore. 

According to a report by Hindustan Times, Wipro mentioned in a statement that Capco is a well-established consulting firm with a team of more than 5,000 technology and business consultants. The start-up has its presence in over 30 odd locations and is expected to skyrocket Wipro’s position in the financial technology industry. Wipro is dependent on its financial services business as it contributes to more than 30% of the company’s total revenue generation.

Brokerage Credit Suisse was neutral on this deal, after the deal with a target price of Rs 500. It said the firm took the right steps towards its transformation journey; however, benefits may take some time to reflect.

Morgan Stanley is underweight on the stock with a target price of Rs 410. It said the deal comes as a surprise given size & integration challenges given its large onsite presence according to Business Today. 

Capco is the third acquisition made by the company under the new leadership of CEO Thierry Delaporte. Wipro has previously acquired SalesForce company- 4C, Eximus Design- engineering services company, and Encore Theme Technologies—a cloud solution specialist in financial services.

“We are very excited to welcome Capco’s admirable leadership team and employees, and global clients, to Wipro. Together, we can deliver high-end consulting and technology transformations, and operations offerings to our clients,” Thierry Delaporte, CEO and Managing Director of Wipro Limited, said. 

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