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Wipro Performance Highlights ( ` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)
Wipro Performance Highlights ( ` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)

Wipro

Performance Highlights

( ` cr)

1QFY14

4QFY13

% chg (qoq)

1QFY13

% chg (yoy)

Net revenue

9,735

9,643

0.9

9,284

4.8

EBITDA

2,020

2,122

(4.8)

2,019

0.1

EBITDA margin (%)

20.8

22.0

(125)bp

21.7

(99)bp

PAT

1,632

1,606

1.6

1,457

12.0

Source: Company, Angel Research

For 1QFY2014, Wipro’s results were broadly in line with our estimates except in terms of USD revenue. The IT services revenue came in at US$1,588mn, up just 0.2% qoq vs our expectation of ~1.0% qoq growth; though in constant currency terms revenues grew by 1.2%. Going forward, for 2QFY2014, the Management has given a USD revenue guidance of US$1,620mn-1,640mn, which translates into a qoq growth of 2-4%, which is above our expectation of 1.5-3.0% qoq growth. We believe that the restructuring initiatives have not yet started showing the expected results and will start reflecting in the financials of the company in due course. We recommend an Accumulate rating on the stock.

Quarterly highlights: For 1QFY2014, Wipro’s consolidated revenues came in at

` 9,735cr, up 0.9% qoq. The company’s consolidated EBITDA margin declined by

125bp qoq to 20.8% while the EBIT margin grew by 49bp qoq to 18.2%. The IT services segment’s EBIT margin was at 20.0%, down ~20bp qoq, impacted by one month wage hikes given to employees (effective 1 June 2013). The PAT came in line with our expectations at `1,632cr, up 1.6% qoq.

Outlook and valuation: For 2QFY2014, the Management has given a USD revenue guidance of US$1,620mn-1,640mn, which translates into a qoq growth of 2-4%. The Management remains confident of the revenue growth pick-up sustaining, citing a pick-up in large deal closures and win rates, uptick in discretionary spending, a strong business pipeline and momentum in demand from the US sustaining. Though the deal pipeline has remained largely unchanged over the past few months, deal closures and win ratios were on the up, reflecting both an improving environment (leading to faster decision-making) and execution (higher win ratios). We expect USD and INR revenue CAGR for IT services to be at 7.2% and 10.7%, respectively over FY2013-15. We expect an EBIT margin of 18.2% and 18.8% for FY2014 and FY2015, respectively. The stock is currently trading at 13.5x FY2014E and 12.3x FY2015E EPS. We value the stock at 14x FY2015E EPS of ` 31.2, which gives a target price of ` 435. We recommend Accumulate rating on the stock.

Key financials (Consolidated, IFRS)

Y/E March (` cr)

FY2011

FY2012

FY2013

FY2014E

FY2015E

Net sales

31,099

37,525

37,823

42,196

45,890

% chg

14.7

20.7

0.8

11.6

8.8

Net profit

5,297

5,573

6,130

6,991

7,705

% chg

15.3

5.2

10.0

14.1

10.2

EBITDA margin (%)

21.2

19.8

21.7

21.0

21.6

EPS ( `)

21.7

22.7

24.8

28.3

31.2

P/E (x)

17.7

16.9

15.4

13.5

12.3

P/BV (x)

3.9

3.3

3.3

2.8

2.4

RoE (%)

22.0

19.5

21.5

20.7

19.4

RoCE (%)

15.5

14.7

15.9

15.3

15.1

EV/Sales (x)

2.7

2.2

2.1

1.8

1.5

EV/EBITDA (x)

12.9

11.4

9.6

8.4

6.8

Source: Company, Angel Research

1QFY2014 Result Update | IT

July 29, 2013

ACCUMULATE

CMP

` 383

Target Price

` 435

Investment Period

12 Months

Stock Info

Sector Market Cap (` cr)

 

IT

93,920

Net debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex

(9,965)

0.6

418/290

163,184

2

19,748

 

5,886

Nifty Reuters Code

Nifty Reuters Code
 

WIPR.BO

Bloomberg Code

WPRO@IN

Shareholding Pattern (%)

 

Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others

 

73.5

4.6

7.3

14.6

Abs. (%)

3m

1yr

3yr

Sensex

2.4

18.7

9.6

Wipro

16.0

16.0

(7.3)

Ankita Somani

+91 22-39357800 Ext: 6819 ankita.somani@angelbroking.com

Exhibit 1: 1QFY2014 performance (Consolidated, IFRS) W ipro | 1QFY2014 Result Update Y/E March (

Exhibit 1: 1QFY2014 performance (Consolidated, IFRS)

Wipro | 1QFY2014 Result Update

Y/E March (` cr)

1QFY14

4QFY13

% chg (qoq)

1QFY13

% chg (yoy)

FY2013

FY2012

% chg (yoy)

Net revenue

9,735

9,643

0.9

9,284

4.8

37,823

37,525

0.8

Cost of revenue

6,472

6,318

2.4

6,132

5.5

26,203

26,317

(0.4)

Gross profit

3,263

3,325

(1.9)

3,152

3.5

11,619

11,207

3.7

SG&A expense

1,243

1,204

3.3

1,133

9.7

4,635

4,806

(3.6)

EBITDA

2,020

2,122

(4.8)

2,019

0.1

8,222

7,414

10.9

Dep. and amortization

250

415

(39.8)

270

(7.5)

1,237

1,013

22.2

EBIT

1,770

1,706

3.7

1,749

1.2

6,984

6,401

9.1

Other inc., net of finance chgs.

287

328

133

990

574

PBT

2,057

2,044

0.6

1,871

9.9

7,974

6,975

14.3

Income tax

425

438

(2.9)

405

5.1

1,835

1,376

33.3

PAT

1,632

1,606

1.6

1,466

11.3

6,139

5,599

9.7

Minority interest

-

-

10

(100.0)

10

26

(62.1)

Adj. PAT

1,632

1,606

1.6

1,457

12.0

6,130

5,573

10.0

Diluted EPS ( `)

6.6

6.5

1.6

5.9

12.0

24.8

22.7

9.3

Gross margin (%)

33.5

34.5

(96)bp

34.0

(43)bp

30.7

29.9

85bp

EBITDA margin (%)

20.8

22.0

(125)bp

21.7

(99)bp

21.7

19.8

198bp

EBIT margin (%)

18.2

17.7

49bp

18.8

(65)bp

18.5

17.1

141bp

PAT margin (%)

19.7

20.1

(35)bp

15.8

391bp

18.8

16.4

244bp

Source: Company, Angel Research

Exhibit 2: 1QFY2014 – Actual vs Angel estimates

 

( ` cr)

Actual

Estimate

Variation (%)

Net revenue

 

9,735

10,186

(4.4)

EBITDA margin (%)

 

20.8

21.1

(34)bp

PAT

1,632

1,633

(0.1)

Source: Company, Angel Research

In-line performance, guidance positive

For 1QFY2014, Wipro’s IT services revenue came in at US$1,588mn, up merely 0.2% qoq and below our estimate of ~1.0% qoq growth. In CC terms, the revenue growth was of 1.2% qoq, which is at the higher end of Wipro’s guided range. In INR terms, the revenue from the IT services segment came in at ` 8,936cr, up 4.5% qoq.

W ipro | 1QFY2014 Result Update Exhibit 3: Trend in IT services revenue growth (qoq)

Wipro | 1QFY2014 Result Update

Exhibit 3: Trend in IT services revenue growth (qoq) 1,610 3 2.4 1,590 1.7 1,588
Exhibit 3: Trend in IT services revenue growth (qoq)
1,610
3
2.4
1,590
1.7
1,588
2
1,585
1,570
1,577
1,550
1
0.5
1,530
1,541
0
1,510
0.2
1,515
1,490
(1)
1,470
(1.4)
1,450
(2)
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
IT products
yoy growth (%)
(USD mn)
(%)

Source: Company, Angel Research

Industry wise, Wipro’s growth was once again led by energy & utilities industry vertical, the revenue from which grew by 5.0% qoq in CC terms. The company posted a 1.7% and 1.0% qoq revenue growth (in CC terms) in retail & transportation and financial solutions industry verticals, respectively, during the quarter. For FY2013, energy & utilities was the only vertical that grew in double digits (ie by ~19% yoy), aided by the acquisition of SAIC. The Management indicated that Wipro is participating in large deals in both energy & utilities and financial solutions industry verticals with noticeable traction in discretionary spends in these verticals as well. The Management indicated that revenue growth from the telecom industry is expected to remain sluggish over the next few quarters.

Exhibit 4: Revenue growth (Service wise – CC basis)

 

% to revenue

% growth (qoq)

% growth (yoy)

Global media and telecom

13.6

0.1

(3.3)

Financial solutions

26.5

1.7

6.9

Manufacturing and hi-tech

19.1

-

3.0

Healthcare, life sciences and services

9.8

(1.7)

3.2

Retail and transportation

15.1

1.0

6.2

Energy and utilities

15.9

5.0

19.9

Source: Company, Angel Research

Service wise, Wipro’s anchor service lines - business application services (contributed 31.3% to revenue) and technology infrastructure services (contributed 24.2% to revenue) - posted a marginal decline of 0.1% and 0.9% qoq in revenues, respectively. Revenues from application development and maintenance (ADM) segment (contributed 20.7% to revenue) also declined by 0.2% qoq. Growth during the quarter was led by analytics & information management services and consulting services, revenues from which grew by 6.5% and 3.5% qoq, respectively. The Management indicated that the company continues to see good traction in advanced technologies like mobility and cloud where the company witnessed a 9% qoq growth in 1QFY2014. The Management indicated that analytics, mobility and data will be the next growth drivers for the overall IT industry, and that the company is making continuous investments in these areas.

W ipro | 1QFY2014 Result Update The company is seeing bottoming out of weakness in

Wipro | 1QFY2014 Result Update

The company is seeing bottoming out of weakness in multiple segments, such as the IMS business out of India, and product engineering.

Exhibit 5: Revenue growth (Service wise)

Service verticals

% to revenue

% growth (qoq)

% growth (yoy)

Technology infrastructure services

24.2

(0.9)

11.3

Analytics and information management

7.5

6.5

10.6

Business application services

31.3

(0.1)

6.9

BPO

8.8

0.5

9.8

Product engineering and mobility

7.5

(0.2)

(6.8)

ADM

20.7

(0.2)

(3.8)

R&D business

10.2

(2.5)

(11.5)

Consulting

2.5

3.5

6.0

Source: Company, Angel Research

Geography wise, Wipro’s primary revenue growth came in from APAC and other emerging markets, which cumulatively grew by 9.9% qoq, while revenues from Europe grew by 1.5% qoq in CC terms. Revenues from India were down 1.5% qoq in CC terms (6.7% decline in USD terms) while that from the US were down 0.6% qoq in CC terms. However, prospectively, the Management is more sanguine on the US geography where both deal wins and the deal pipeline have improved meaningfully in the recent past.

Exhibit 6: Revenue growth (Geography wise, CC basis)

 

% to revenue

% growth (qoq)

% growth (yoy)

America

49.7

(0.6)

1.1

Europe

29.0

1.5

8.4

India and Middle East

8.8

(1.5)

9.3

APAC and other emerging markets

12.5

9.9

19.2

Source: Company, Angel Research

Segmental performance

During the quarter, the IT services segment’s revenue came in at US$1,588mn, up merely 0.2% qoq, with India and the Middle East geographies being the major revenue draggers, with revenue declining by 6% qoq.

W ipro | 1QFY2014 Result Update Exhibit 7: IT services – Revenue growth (qoq) 6

Wipro | 1QFY2014 Result Update

Exhibit 7: IT services – Revenue growth (qoq) 6 5.3 4.7 4 3.5 2.8 2.4
Exhibit 7: IT services – Revenue growth (qoq)
6
5.3
4.7
4
3.5
2.8
2.4
1.7
1.5
1.5
2
1.1
0.5
0.2
0.9
(0.5)
(0.3)
0.5
0.2
0
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
(0.9)
(2)
(1.4)
(4)
(4.8)
(6)
(6.0)
(8)
Global IT
India and Middle East
BPO
IT services
(%)

Source: Company, Angel Research

The IT products segment reported a 14.3% yoy decline in its revenue to ` 817cr during the quarter, as majority of business in this segment comes from India and the Middle East regions which were soft during the quarter.

Exhibit 8: IT products – Revenue growth (yoy) 1,100 25 1,075 1,000 15 997 14.7
Exhibit 8: IT products – Revenue growth (yoy)
1,100
25
1,075
1,000
15
997
14.7
10.8
953
900
5
899
(5.2)
800
(5)
817
(10.2)
(14.3)
700
(15)
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
IT products
yoy growth (%)
` cr)(
(%)

Source: Company, Angel Research

On a consolidated level, Wipro’s revenue came in at ` 9,735cr, up 0.9% qoq.

Hiring and utilization

Wipro reported a net addition of 1,469 employees in its IT services employee base, which now stands at 147,281 headcounts. Voluntary attritions (annualized) in the global IT business inched up to 13.0% in 1QFY2014 from 12.5% in 4QFY2012. The utilization rate of the global IT business remained almost flat qoq at 64.7%, which is at low levels for the company on an historical basis. The Management indicated that this is because of the following factors: 1) hyper automation process being implemented in the run services, resulting in higher productivity; 2) freshers added into the system. Going ahead, increased utilization level will be an important margin lever.

(%)

(%) W ipro | 1QFY2014 Result Update Exhibit 9: Employee pyramid Employee pyramid 1QFY13 2QFY13 3QFY13

Wipro | 1QFY2014 Result Update

Exhibit 9: Employee pyramid

Employee pyramid

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

Utilization – Global IT (%)

68.3

66.8

64.8

64.9

64.7

Attrition (%)

Global IT

15.2

14.4

12.9

12.5

13.0

BPO

13.4

14.4

12.5

12.8

12.3

Net additions

2,632

2,017

2,336

2,907

1,469

Source: Company, Angel Research

Margins mixed

During 1QFY2014, Wipro’s consolidated EBITDA margin declined by 125bp qoq to 20.8% while EBIT margin grew by 49bp qoq to 18.2%, as there was a one-time depreciation cost last quarter which was not present during 1QFY2014. The IT services segment’s EBIT margin was at 20.0%, down ~20bp qoq, impacted by one month wage hikes given to employees (effective June 1, 2013). The EBIT margin of the IT products business segment declined by 90bp qoq to 1.6%, negatively impacted due to INR depreciation.

Exhibit 10: Segment-wise EBIT margin trend

25

20

15

10

5

0

21.0

20.7

20.8

20.2

20.0

18.8 18.6 18.7 17.7
18.8
18.6
18.7
17.7

18.2

3.0

2.2 2.4 2.5
2.2
2.4
2.5

1.6

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

IT services IT products Consolidated

IT services

IT services IT products Consolidated

IT products

Consolidated

Consolidated

Source: Company, Angel Research

W ipro | 1QFY2014 Result Update Client pyramid Wipro added 28 new clients in 1QFY2014,

Wipro | 1QFY2014 Result Update

Client pyramid

Wipro added 28 new clients in 1QFY2014, lowest since 1QFY2011, with its active client base standing at 946 from 978 in 4QFY2013. Overall, two clients were added in the US$1mn+ revenue brackets. The company’s focus on account mining continues to yield results with top clients driving growth The company’s revenue from its top clients grew by 3% qoq, while revenues from the top 5/10 clients increased by 4.8%/2.9% qoq.

Exhibit 11: Client metrics

Particulars

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

US$100mn plus

8

9

10

10

10

US$75mn–$100mn

6

7

6

6

5

US$50mn–$75mn

11

9

10

10

12

US$20mn–$50mn

48

46

47

50

49

US$10mn–$20mn

58

62

59

57

57

US$5mn–$10mn

82

62

82

80

85

US$3mn–$5mn

89

85

79

78

63

US$1mn–$3mn

176

182

191

199

211

New clients

37

53

50

52

28

Active customers

919

939

966

978

946

Source: Company, Angel Research

Outlook and valuation

For 2QFY2014, the Management has given a USD revenue guidance of US$1,620mn-1,640mn, which translates into a qoq growth of 2-4%, well above our expectation of 1.5-3.0% qoq growth. The Management remains confident of the revenue growth pick-up sustaining, citing a pick-up in large deal closures and win rates, uptick in discretionary spending, strong business pipeline and momentum in demand from US sustaining.

The Management indicated that CY2013 IT budgets are expected to remain stable and anticipates a positive demand environment ahead. Though the deal pipeline has remained largely unchanged over the past few months, deal closures and win ratios were on the up, reflecting both an improving environment (leading to faster decision-making) and execution (higher win ratios). The company sees itself better placed than this time last year, to latch on to opportunities in the market. We believe that the restructuring initiatives have not yet started showing the expected results and will start reflecting in the financials of the company in due course.

We expect Wipro’s volume growth to continue to lag from some of its peer companies in the near term. Wipro has chosen a growth strategy of focusing on a selected few segments in terms of industry verticals and services. We are modeling in an ~1.8% revenue CQGR over 2Q-4QFY2014. We expect USD and INR revenue CAGR for IT services to be at 7.2% and 10.7%, respectively over FY2013-15.

Wipro has been showing a decent performance in the past five quarters by rationalizing costs. The Management has given wage hikes from June 1, 2013 (average of ~8.5% to offshore employees and ~3% to onsite employees), which will impact operating margins in 2QFY2014. We expect an EBIT margin of 18.2% and 18.8% for FY2014 and FY2015, respectively. The stock is currently trading at 13.5x FY2014E and 12.3x FY2015E EPS. We value the stock at 14x FY2015E EPS

W ipro | 1QFY2014 Result Update of ` 31.2, which is still at a reasonable

Wipro | 1QFY2014 Result Update

of `31.2, which is still at a reasonable discount to our target multiple for TCS. The discounted valuation for Wipro vis-a-vis TCS is fair in our view given several years of revenue underperformance at Wipro, while several quarters of sustained performance will be required for Wipro to narrow the valuation multiples. We recommend an Accumulate rating on the stock with a target price of `435.

Exhibit 12: Key assumptions

 

FY2014

FY2015

Revenue growth – IT services (USD)

6.0

8.5

USD-INR rate (realized)

57.9

58.0

Revenue growth – Consolidated (`)

11.6

8.8

EBITDA margin (%)

21.0

21.6

Tax rate (%)

18.2

18.8

EPS growth (%)

14.1

10.2

Source: Company, Angel Research

Exhibit 13: One-year forward PE chart 950 800 650 500 350 200 50 Price 27x
Exhibit 13: One-year forward PE chart
950
800
650
500
350
200
50
Price
27x
22x
17x
12x
7x
(`)
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13

Source: Company, Angel Research

Exhibit 14: Recommendation summary W ipro | 1QFY2014 Result Update

Exhibit 14: Recommendation summary

Wipro | 1QFY2014 Result Update

Company

Reco.

CMP

Tgt. price

Upside

FY2015E

FY2015E

FY2012-15E

FY2015E

FY2015E

 

(`)

( `)

(%)

EBITDA (%)

P/E (x)

EPS CAGR (%)

RoCE (%)

RoE (%)

HCL Tech

Neutral

904

-

-

22.0

14.3

20.7

1.7

21.7

Hexaware

Accumulate

114

123

8.4

20.5

8.8

13.1

1.2

23.5

Infosys

Neutral

2,916

-

26.4

15.4

9.2

2.5

19.3

Infotech Enterprises

Accumulate

176

190

7.9

17.6

7.8

15.7

0.5

14.0

KPIT Cummins

Accumulate

132

144

9.0

16.7

9.2

21.6

0.7

16.7

MindTree

Accumulate

963

1050

9.1

19.9

9.1

25.1

0.9

20.3

MphasiS

Neutral

400

-

-

18.2

9.2

4.9

0.6

14.2

NIIT

Neutral

17

-

-

9.1

3.1

(7.1)

(0.0)

11.9

Persistent

Buy

53

595

1,024.8

26.2

0.9

19.0

(0.3)

16.7

TCS

Buy

1,772

2,060

16.2

30.0

17.2

23.8

3.5

29.2

Tech Mahindra

Accumulate

1,217

1,390

14.2

19.1

10.4

11.4

1.7

18.9

Wipro

Accumulate

383

435

13.6

21.6

12.3

11.2

1.5

19.4

Source: Company, Angel Research

Company background

Wipro is among leading Indian companies, majorly offering IT services. The company is also engaged in IT hardware (11% of sales) and consumer care and lighting (10% of sales) businesses. Wipro's IT arm is India's fourth largest IT firm, employing more than 1,47,000 professionals, offering a wide portfolio of services such as ADM, consulting and package implementation, and servicing more than 950 clients.

W ipro | 1QFY2014 Result Update Profit & Loss account (Consolidated, IFRS) Y/E March (

Wipro | 1QFY2014 Result Update

Profit & Loss account (Consolidated, IFRS)

Y/E March (` cr)

FY2011

FY2012

FY2013

FY2014E

FY2015E

Net revenue

31,099

37,525

37,823

42,196

45,890

Cost of revenues

21,285

26,317

26,203

29,179

31,685

Gross profit

9,814

11,207

11,619

13,017

14,206

%

of net sales

31.6

29.9

30.7

30.8

31.0

Selling and mktg exp.

2,218

2,778

2,425

2,903

3,042

%

of net sales

7.1

7.4

6.4

6.9

6.6

General and admin exp.

1,829

2,029

2,211

2,424

2,519

%

of net sales

5.9

5.4

5.8

5.7

5.5

Depreciation and amortization

821

1,013

1,237

1,159

1,285

%

of net sales

2.6

2.7

3.3

2.7

2.8

 

EBIT

5,767

6,401

6,984

7,690

8,644

%

of net sales

18.5

17.1

18.5

18.2

18.8

Other income, net

472

541

1,001

1,238

1,630

Share in profits of eq. acc. ass.

64.8

33.3

-10.5

0

0

Profit before tax

6,303

6,975

7,974

8,928

10,274

Provision for tax

971

1,376

1,835

1,937

2,568

%

of PBT

15.4

19.7

23.0

21.7

25.0

 

PAT

5,332

5,599

6,139

6,991

7,705

Share in earnings of associate

-

-

-

-

1

Minority interest

35

26

10

-

-

Adj. PAT

5,297

5,573

6,130

6,991

7,705

Diluted EPS ( `)

21.7

22.7

24.8

28.3

31.2

W ipro | 1QFY2014 Result Update Balance sheet (Consolidated, IFRS) Y/E March ( ` cr)

Wipro | 1QFY2014 Result Update

Balance sheet (Consolidated, IFRS)

Y/E March (` cr)

FY2011

FY2012

FY2013

FY2014E

FY20115E

Assets

Goodwill

5,482

6,794

5,476

5,476

5,476

Intangible assets

355

423

171

171

171

Property, plant & equipment

5,509

5,899

5,053

5,093

5,009

Investment in equ. acc. investees

299

323

-

-

-

Derivative assets

298

346

5

5

5

Non-current tax assets

924

1,029

1,031

1,231

1,431

Deferred tax assets

147

260

424

574

724

Other non-current assets

898

1,178

1,074

1,074

1,074

Total non-current assets

13,913

16,251

13,233

13,624

13,889

Inventories

971

1,066

326

694

754

Trade receivables

6,163

8,033

7,664

8,030

8,298

Other current assets

1,974

2,574

3,107

3,107

3,107

Unbilled revenues

2,415

3,003

3,199

3,464

3,632

Available for sale investments

4,928

4,196

6,917

10,831

13,589

Current tax assets

496

564

741

850

900

Derivative assets

171

147

303

350

400

Cash and cash equivalents

6,114

7,767

8,484

9,319

12,695

Total current assets

23,231

27,349

30,740

36,644

43,376

Total assets

37,144

43,600

43,973

50,268

57,264

Equity

Share capital

491

492

493

493

493

Share premium

3,012

3,046

1,176

1,176

1,176

Retained earnings

20,325

24,191

25,918

31,173

37,143

Share based payment reserve

136

198

132

132

132

Other components of equity

58

659

717

717

717

Shares held by controlled trust

(54)

(54)

(54)

(54)

(54)

Equity attrib. to shareholders of Co.

23,968

28,531

28,381

33,637

39,606

Minority interest

69

85

117

117

117

Total equity

24,037

28,616

28,498

33,754

39,724

Liabilities

Long term loans and borrowings

1,976

2,251

85

185

235

Deferred tax liability

30

35

85

85

85

Derivative liabilities

259

31

12

12

12

Non-current tax liability

502

540

479

529

579

Other non-current liabilities

271

352

339

450

450

Provisions

8

6

1

1

1

Total non-current liabilities

3045

3215

1001

1262

1362

Loans and bank overdraft

3,304

3,645

6,296

6,496

6,646

Trade payables

4,405

4,726

4,807

4,797

5,208

Unearned revenues

660

957

1,035

1,173

1,168

Current tax liabilities

734

723

1,023

1,223

1,373

Derivative liabilities

136

635

98

98

98

Other current liabilities

591

970

1,099

1,299

1,499

Provisions

232

112

117

167

187

Total current liabilities

10,062

11,769

14,474

15,252

16,179

Total liabilities

13,107

14,984

15,475

16,514

17,541

Total equity and liabilities

37,144

43,600

43,973

50,268

57,264

W ipro | 1QFY2014 Result Update Cash flow statement (Consolidated, IFRS) Y/E March ( `

Wipro | 1QFY2014 Result Update

Cash flow statement (Consolidated, IFRS)

Y/E March (` cr)

FY2011

FY2012

FY2013

FY2014E

FY2015E

Pre tax profit from operations

5,832

6,434

6,974

7,690

8,644

Depreciation

821

1,013

1,237

1,159

1,285

Expenses (deferred)/written off

(35)

(26)

(10)

-

-

Pre tax cash from operations

6,618

7,422

8,201

8,849

9,929

Other income/prior period ad

472

541

1,001

1,238

1,630

Net cash from operations

7,090

7,962

9,202

10,087

11,559

Tax

(971)

(1,376)

(1,835)

(1,937)

(2,568)

Cash profits

6,119

6,586

7,367

8,150

8,990

(Inc)/dec in current assets

(1,601)

(3,197)

47

(1,155)

(597)

Inc/(dec) in current liab.

(499)

1,707

2,706

778

927

Net trade working capital

(2,101)

(1,490)

2,752

(377)

330

Cashflow from oper. actv.

4,018

5,096

10,119

7,773

9,320

(Inc)/dec in fixed assets

(985)

(1,402)

(391)

(1,200)

(1,200)

(Inc)/dec in intangibles

(56)

(1,380)

1,570

-

-

(Inc)/dec in investments

(1,951)

708

(2,398)

(3,914)

(2,758)

(Inc)/dec in net def. tax assets

22

(113)

(164)

(150)

(150)

(Inc)/dec in derivative assets

(178)

(48)

341

-

-

(Inc)/dec in non-current tax asset

(578)

(105)

(2)

(200)

(200)

(Inc)/dec in minority interest

25

16

32

-

-

Inc/(dec) in other non-current liab

103

(105)

(49)

161

50

(Inc)/dec in other non-current ast.

(20)

(280)

104

-

-

Cashflow from investing activities

(3,616)

(2,709)

(957)

(5,303)

(4,258)

Inc/(dec) in debt

165

275

(2,166)

100

50

Inc/(dec) in equity/premium

617

713

(4,544)

0

(0)

Dividends

(1,558)

(1,723)

(1,736)

(1,736)

(1,736)

Cashflow from financing activities

(775)

(735)

(8,446)

(1,636)

(1,686)

Cash generated/(utilized)

(374)

1,653

717

835

3,377

Cash at start of the year

6,488

6,114

7,767

8,484

9,319

Cash at end of the year

6,114

7,767

8,484

9,319

12,695

Key Ratios W ipro | 1QFY2014 Result Update Y/E March FY2011 FY2012 FY2013 FY2014E FY2015E

Key Ratios

Wipro | 1QFY2014 Result Update

Y/E March

FY2011

FY2012

FY2013

FY2014E

FY2015E

Valuation ratio(x)

P/E (on FDEPS)

17.7

16.9

15.4

13.5

12.3

P/CEPS

8.5

7.8

7.2

6.4

5.8

P/BVPS

3.9

3.3

3.3

2.8

2.4

Dividend yield (%)

1.6

1.6

1.6

1.6

1.6

EV/Sales

2.7

2.2

2.1

1.8

1.5

EV/EBITDA

12.9

11.4

9.6

8.4

6.8

EV/Total assets

2.3

1.9

1.8

1.5

1.2

Per share data (`)

EPS (Fully diluted)

21.7

22.7

24.8

28.3

31.2

Cash EPS

45.1

48.8

53.0

59.4

66.1

Dividend

6.0

6.0

6.0

6.0

6.0

Book value

98.0

116.6

115.3

136.5

160.7

DuPont analysis

Tax retention ratio (PAT/PBT)

0.8

0.8

0.8

0.8

0.8

Cost of debt (PBT/EBIT)

7.7

6.9

6.4

7.7

8.0

EBIT margin (EBIT/Sales)

0.0

0.0

0.0

0.0

0.0

Asset turnover ratio (Sales/Assets)

0.8

0.9

0.9

0.8

0.8

Leverage ratio (Assets/Equity)

1.5

1.5

1.5

1.5

1.4

Operating ROE

22.2

19.6

21.6

20.8

19.5

Return ratios (%)

RoCE (pre-tax)

15.5

14.7

15.9

15.3

15.1

Angel RoIC

28.0

25.8

30.2

31.2

33.9

RoE

22.0

19.5

21.5

20.7

19.4

Turnover ratios (x)

Asset turnover(fixed assets)

0.9

0.9

0.9

0.9

0.9

Receivables days

66

69

76

68

69

Payable days

71

63

66

66

66

Research Team Tel: 022 - 3935 7800 DISCLAIMER E-mail: re search@angelbroking.com W ipro | 1QFY2014

Research Team Tel: 022 - 3935 7800

DISCLAIMER

E-mail: research@angelbroking.com

Wipro | 1QFY2014 Result Update

Website: www.angelbroking.com

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Ltd. and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement

Wipro

1. Analyst ownership of the stock

No

2. Angel and its Group companies ownership of the stock

No

3. Angel and its Group companies' Directors ownership of the stock

No

4. Broking relationship with company covered

No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)