Wipro’s bold bet on Capco gets the cold shoulder from investors

MUMBAI: Wipro Ltd has been among the most acquisitive companies among Indian IT service providers. But it hasn’t had much to show in terms of benefits accrued from all its mergers and acquisitions. Its growth rates are still far behind peers such as Tata Consultancy Services Ltd and Infosys Ltd. Now, it has gone ahead with a much bolder bet, by acquiring Capco, a consultancy firm in the banking and financial services (BFSI) space, for as much as $1.45 billion.

Given the chequered history of past acquisitions, investors understandably welcomed the news with cold shoulders. Some analysts are also worried about the premium valuation paid for Capco. Wipro shares fell nearly 4% on Friday on NSE.

“The key lies in execution and extracting value from the acquisition. Wipro’s track-record on that score from acquisitions over the last two decades has been less than average.