Wipro will acquire the entity for $375 million, including earn-outs through cash, implying a 1.19x price-to-sales multiple (based on CY24 numbers).
If the acquisition goes through successfully, the acquired entity could add 280 basis points to Wipro’s revenues in FY27F.Management, however, indicated the deal could negatively impact EBIT margins by 50 bps in FY27F (on a full-year basis) due to integration costs, amortisation charges, and initially lower margins of the acquired entity.
Morgan Stanley has an ‘Equalweight’ rating on Wipro with a price target of ₹285.
The brokerage wrote in its note that the acquisition will be accretive to Wipro’s ER&D revenue (up by 10%, by estimates) but could be dilutive to margins and neutral to slightly dilutive to EPS in FY27E.The acquisition will also expand Wipro’s presence in new geographies such as South Korea and add capabilities in embedded software, digital engineering, and IoT. The customer base and priority sectors of DTS complement Wipro’s portfolio, while anchor clients such as Samsung further boost the client roster.
DTS reported revenues of $314.5 million in CY24 (flat versus CY22), with revenue per employee of $56,000 across 5,600 employees, implying a majority India-based workforce.
HSBC maintained a ‘Hold’ rating on Wipro with a price target of ₹260.
According to the management, Wipro’s said strong deal wins in recent quarters provide confidence in a growth recovery in H2FY26. Client-specific issues in Europe appear largely resolved, as do recent management changes.
HSBC added that Wipro’s valuation gap versus peers is nearing historic lows.
Wipro shares ended 0.18% lower on Thursday at ₹250.40 and have fallen nearly 17% so far in 2025.
