PINC Research has maintained buy rating on Wipro Technologies Ltd stock with a price target of Rs 500 in its report dated Dec 16, 2010.

Near term outlook is positive - The budgets are generally expected to be marginally positive but the outsourcing/ offshoring component is expected to rise in CY11. Also, the next budgeting cycle might see higher component of discretionary spending compared to the previous year.

The company is not witnessing any pricing pressure; however they expect price increment in FY12.

Current quarter on track - Q3FY11 is on track as clients are looking to finish the allocated budgets for this year. However, the holiday season in the western countries might put some pressure on volume growth, which is not expected to be as impressive as Q2FY11. It is expected to achieve the upper end of revenue guidance which is 3.5-5.5%QoQ growth in USD terms; supported by additional ~1%QoQ growth due to cross currency (based on current exchange rates).

Shorter cycles of spending - Clients are not taking long-term calls to announce multi-million multi-year deals at this point of time. Most of the spending done by clients is short term in nature. Clients' focus on R&D and engineering services is muted and not expected to recover in the near term.

Diversification of services in troubled verticals - Telecom and hi tech vertical have been under tremendous pressure on the back of muted spending by clients in R&D services. Wipro has reduced exposure to R&D and has started providing more of IT services for clients in telecom vertical which has led to reasonable growth.

Hiring trends - Wipro has given first round of campus offers. In a medium to long term, they are also planning to include non-engineers in the workforce. The attrition is slowing down and it will normalize in the next quarter.

Salary increase - The normal cycle is in February, so we can expect increases in February 2011 or April 2011 depending upon the supply side constraints at that point of time.