BUY
TARGET PRICE (Rs) : 500
Wipro has appointed Srini Pallia as the CEO and MD with effect from 7-Apr-24 for five years after Thierry Delaporte tendered his resignation to pursue his passions outside the workplace. Srini has been with Wipro for over three decades and most recently served as the CEO for Americas 1 (~31% of revenue), where he oversaw diverse industry sectors, established their vision, and implemented growth strategies. The appointment of Srini, a Wipro veteran, will confirm a smooth transition and sustain current growth strategies with only some tweaking to ensure better execution. Srini will find him in action from day 1 as the company is facing its own challenges in addition to broader industry headwinds like muted demand, weak discretionary spending, Gen AI disruptions, uncertain macros, and uncertainties linked with election year in key markets. We retain our estimates and await more clarity on leadership transition and any tweaking in growth strategies. We maintain ADD with a TP of Rs500 at 19x its Mar-26E EPS.
Thierry Delaporte resigns, Wipro appoints Srini Pallia as CEO and MD
Wipro has appointed Srini Pallia as the CEO and MD, with effect from 7-Apr-24 for five years. He succeeds Thierry Delaporte, who, after spearheading a significant transformation at Wipro for almost four years, is stepping down to pursue passions outside the workplace. Thierry joined Wipro in Jul-20 and resigned about a year before his term completion. Thierry will continue until the end of May-24, working closely with Srini and Rishad Premji to ensure a smooth transition. Srini has been with Wipro for over three decades and most recently served as the CEO for Americas 1 (contributed ~31% to Q3FY24 revenue). He will be based in New Jersey and report to Rishad Premji.
Top-level exits partly reflect limited success; execution improvement key to narrow down growth differential
Wipro has seen steady churn at the top level (8 CEOs) since the turn of the century, the highest among India-based IT services firms. These include Vivek Paul, Azim Premji, Girish Paranjpe and Suresh Vaswani (joint CEOs), TK Kurien, Abidali Neemuchwala, Thierry Delaporte, and now Srinivas Pallia. Wipro has underperformed its peers for a long time on account of poor execution, leadership churn, portfolio challenges, and mediocre M&A record. Wipro has done significant restructuring under Thierry’s leadership to simplify organizational structure, drive decision-making agility with empowered GAEs, strengthen relations with partner ecosystems, and augment capabilities with some bold M&As like Capco. Wipro has been seeing an influx of talent from various countries and companies along with the departure of long-standing Wipro veterans, which may have led to some cultural differences and a sense of disconnect within the organization. Srini is likely to garner better acceptance internally and take swift actions to arrest churn at senior levels and re-energise employee morale. We believe strong execution will address growth underperformance issues and Srini is likely to garner the required support from the rest of leadership team, founders, and the board to ensure swift corrective actions.
Brief about Srini Pallia
Srini joined Wipro in 1992 and has held many leadership positions, including President of Wipro’s Consumer Business Unit and Global Head of Business Application Services. Most recently, he served as the CEO for Americas 1. In this role, Srini led a wide range of industry sectors and was responsible for establishing their vision, as well as shaping and implementing growth strategies. Srini holds a bachelor’s degree in engineering and a master’s degree in management studies from Indian Institute of Science, Bangalore. He graduated from Harvard Business School’s leading Global Businesses Executive Program and the Advanced Leadership Program at McGill Executive Institute.
