Wipro Results

Document Sample
Wipro Results Powered By Docstoc
					                                                                                                         4QFY2012 Result Update | IT
                                                                                                                           April 25, 2012



 Wipro                                                                                       NEUTRAL
                                                                                             CMP                                    `410
 Performance Highlights                                                                      Target Price                              -
(` cr)                    4QFY12        3QFY12       % chg (qoq)   4QFY11     % chg (yoy)    Investment Period                          -
Net revenue                  9,869       9,997             (1.3)    8,302           18.9
EBITDA                       1,961       1,984             (1.2)    1,707           14.9    Stock Info
EBITDA margin (%)             19.9        19.8              2bp      20.6         (69)bp    Sector                                      IT
PAT                          1,481       1,456              1.7     1,375            7.7    Market Cap (` cr)                   100,630
Source: Company, Angel Research                                                             Beta                                       0.8
For 4QFY2012, Wipro’s results came in-line with our expectations.                           52 Week High / Low                  472/310
The company’s client base increased to seven in the US100mn+ bracket at the                 Avg. Daily Volume                   126,707
end of FY2012 from three in FY2011, which was a positive sign. The major                    Face Value (`)                              2
disappointment came from management’s 1QFY2013 USD revenue growth
                                                                                            BSE Sensex                              17,151
guidance of -1 to 1%, which is very sluggish as 1Q is typically a good quarter for
                                                                                            Nifty                                    5,202
IT companies. This guidance indicates that management is seeing further delays
in deal closures and ramp-up of projects. We recommend Neutral on the stock.                Reuters Code                        WIPR.BO
                                                                                            Bloomberg Code                    WPRO@IN
Quarterly highlights: For 4QFY2012, Wipro registered a 1.3% qoq decline in its
revenue to `9,869cr. Revenue from the IT services segment came in at
US$1,536mn, up 2.0% qoq. Revenue from the consumer care and lighting
                                                                                            Shareholding Pattern (%)
segment grew strongly by 25.2% yoy, while the IT products segment reported
merely 2.9% yoy revenue growth. EBIT margin of the IT services, IT products and             Promoters                                78.4
consumer care and lighting business declined by 8bp, 60bp and 61bp qoq to                   MF / Banks / Indian Fls                   3.4
20.7%, 4.7% and 12.5%, respectively. Wipro’s overall EBIT margin declined by                FII / NRIs / OCBs                         6.7
8bp qoq to 17.2%.                                                                           Indian Public / Others                   11.5
Outlook and valuation: For 1QFY2013, Wipro has given USD revenue guidance
of US$1,520mn-1,550mn, which translates into qoq growth of -1 to 1% qoq,
which is extremely subdued. Now, management’s endeavor is to grow at par with               Abs. (%)                  3m     1yr       3yr
industry’s average revenue growth for FY2013. Nasscom has guided for 11-14%                 Sensex                   0.4   (12.4)    51.4
yoy USD revenue growth for FY2013 – to achieve this Wipro needs to record at                Wipro                    (2.0) (11.9) 119.2
least 3.5% qoq USD revenue growth post 1QFY2013. This number indicates that
management is banking more on back-ended growth for FY2013, which makes
us slightly cautious about the company’s growth outlook. We expect USD and INR
revenue CAGR for IT services to be at 10.3% and 11.0%, respectively, over
FY2012-14E. We expect EBIT margin of the IT services segment to slide down to
20.2% in FY2013 from 20.8% in FY2012. We expect a 12.1% and 12.3% CAGR
in EBITDA and PAT, respectively, over FY2012-14E. We value the stock at 15x
FY2014E EPS of `28.6, which gives us a target price of `430. We recommend
Neutral on the stock.
Key financials (Consolidated, IFRS)
Y/E March (` cr)             FY2010*       FY2011        FY2012     FY2013E     FY2014E
Net sales                     27,124       31,099        37,525      41,918      46,879
% chg                             6.2         14.7          20.7       11.7        11.8
Net profit                     4,594        5,297         5,573       6,152       7,030
% chg                           18.5          15.3           5.2       10.4        14.3
EBITDA margin (%)               21.9         21.2          19.8        19.4        19.9
EPS (`)                         18.9         21.7          22.7        25.1        28.6
P/E (x)                         21.7         18.9          18.1        16.4        14.3
P/BV (x)                         4.6           4.2           3.5        3.0          2.6
RoE (%)                         23.4         22.0          19.5        18.6        18.3
RoCE (%)                        15.6         15.5          14.7        13.9        13.9     Ankita Somani
EV/Sales (x)                     3.4           2.9           2.4        2.1          1.7    +91 22 3935 7800 Ext: 6819
EV/EBITDA (x)                   15.7         13.9          12.3        10.6          8.6    ankita.somani@angelbroking.com
Source: Company, Angel Research; Note: *Adjusted for 2:3 bonus
Please refer to important disclosures at the end of this report                                                                         1
                                                                                               Wipro | 4QFY2012 Result Update




Exhibit 1: 4QFY2012 performance (Consolidated, IFRS)
Y/E March (` cr)                  4QFY12   3QFY12       % chg (qoq)   4QFY11     % chg (yoy)      FY2012      FY2011        % chg (yoy)
Net revenue                        9,869    9,997             (1.3)     8,302          18.9       37,525       31,099              20.7
Cost of revenue                    6,580    6,710             (1.9)     5,512          19.4       25,304       20,464              23.7
Gross profit                       3,289    3,287              0.1      2,790          17.9       12,220       10,635              14.9
SG&A expense                       1,328    1,303              1.9      1,083          22.6        4,806        4,047              18.8
EBITDA                             1,961    1,984             (1.2)     1,707          14.9        7,414        6,588              12.5
Dep. and amortization                267      260              2.5        228          17.0        1,013            821            23.4
EBIT                               1,694    1,724             (1.7)     1,479          14.6        6,401        5,767              11.0
Other income                         198      113                         149                       541             472
PBT                                1,893    1,849              2.4      1,642          15.3        6,975        6,303              10.7
Income tax                           402      381              5.4        260          54.2        1,376            971            41.7
PAT                                1,491    1,468              1.6      1,381           7.9        5,599        5,332               5.0
Minority interest                     10       11             (9.6)          6         74.6          26              35          (25.8)
Adj. PAT                           1,481    1,456              1.7      1,375           7.7        5,573        5,297               5.2
Diluted EPS (`)                      6.0      5.9              1.7         5.6          7.7         22.7            21.7            4.7
Gross margin (%)                    33.3     32.9             44bp        33.6       (28)bp         32.6            34.2       (163)bp
EBITDA margin (%)                   19.9     19.8              2bp        20.6       (69)bp         19.8            21.2       (143)bp
EBIT margin (%)                     17.2     17.2             (8)bp       17.8       (64)bp         17.1            18.5       (149)bp
PAT margin (%)                      17.0     15.7            131bp        16.6        37bp          16.3            18.6       (226)bp
Source: Company, Angel Research

                                              Exhibit 2: 4QFY2012 – Actual vs. Angel estimates
                                               (` cr)                                    Actual        Estimate            Variation (%)
                                               Net revenue                               9,869             10,125                  (2.5)
                                               EBITDA margin (%)                          19.9               19.9                 (1)bp
                                               PAT                                       1,481              1,522                  (2.7)
                                               Source: Company, Angel Research


                                              Results in-line but guidance muted
                                              For 4QFY2012, Wipro’s IT services revenue came largely in-line with expectations
                                              at US$1,536mn, up 2.0% qoq, primarily led by 0.8% qoq volume growth in global
                                              IT services and 1.1% qoq (constant currency basis) offshore pricing growth.
                                              In constant currency (CC) terms, onsite pricing was flat on a qoq basis. Volume
                                              growth of 0.8% qoq in global IT services came on the back of 1.1% offshore
                                              volume growth and 0.2% onsite volume growth. In CC terms, the IT service
                                              segment’s revenue grew by 1.3% qoq to US$1,525mn. In INR terms, revenue of
                                              the IT services segment came in at `7,590cr, down 0.2%, impacted by INR
                                              appreciation against USD.




April 25, 2012                                                                                                                        2
                                                                        Wipro | 4QFY2012 Result Update




                 Exhibit 3: Volume trend (Effort wise)
                       10
                                                                  9.0

                        8

                                               5.8
                        6
                                                                  4.7




                 (%)
                        4
                              2.8                                                     2.0
                        2                                                                      1.1
                                                                               1.5
                                               0.2
                              (0.4)                                                                  0.2
                        0
                              4QFY11        1QFY12              2QFY12             3QFY12   4QFY12
                       (2)
                                                    Onsite                    Offshore

                 Source: Company, Angel Research



                 Exhibit 4: Pricing trend (Effort wise, CC basis)
                       6
                                                                                    4.3
                       4

                       2           0.9                                               3.6      1.1
                                                                (0.4)
                             0.4                                                                 -
                 (%)




                       0
                                               (1.2)

                       (2)
                                            (1.7)               (4.1)
                       (4)

                       (6)
                              4QFY11        1QFY12           2QFY12                3QFY12   4QFY12
                                                       Onsite           Offshore

                 Source: Company, Angel Research


                 Service wise, Wipro’s anchor service lines, business application services
                 (contributed 30.6% to revenue), application development and maintenance (ADM)
                 (contributed 23.6% to revenue) and technology infrastructure services (contributed
                 22.6% to revenue) posted 1.3%, 0.7% and 6.4% qoq growth in revenue,
                 respectively. In addition, analytics and information management services posted
                 modest 5.4% qoq growth in revenue. However, revenue from other service verticals
                 such as BPO and product engineering and mobility declined by 2.0% and 1.5%
                 qoq, respectively. Service vertical wise, the company is now witnessing traction
                 from deals related to application management, application support, infrastructure
                 services and BPO. Revenue from BPO services has been declining since the last
                 three quarters and management indicated that revenue from BPO is expected to
                 come back to the growth path in the next couple of quarters.




April 25, 2012                                                                                             3
                                                                  Wipro | 4QFY2012 Result Update




                 Exhibit 5: Revenue growth (Service wise)
                 Service verticals                        % to revenue   % growth (qoq) % growth (yoy)
                 Technology infrastructure services               22.6              6.4             14.7
                 Analytics and information management              6.8              5.4             24.9
                 Business application services                    30.6              1.3             13.0
                 BPO                                               8.2             (2.0)            (8.4)
                 Product engineering and mobility                  8.2             (1.5)             8.5
                 ADM                                              23.6              0.7              5.1
                 R&D business                                     12.0             (2.9)             1.3
                 Consulting                                        2.9             (1.1)             0.3
                 Source: Company, Angel Research


                 Industry wise, Wipro’s growth was led by retail and transportation (contributed
                 15.4% to revenue) and energy and utilities (contributed 14.0% to revenue), which
                 reported revenue growth of 5.2% and 5.1% qoq (CC terms), respectively. Revenue
                 from the company’s anchor vertical, financial services (contributed 26.6% to
                 revenue) reported a 1.1% qoq decline (CC terms) due to challenges and delays
                 seen from investment banking and insurance firms. Revenue from healthcare, life
                 sciences and services (contributed 10.0% to revenue) and manufacturing and
                 hi-tech (contributed 19.1% to revenue) grew by 1.7% and 2.4% qoq (CC terms),
                 respectively. Management indicated that equipment manufacturers’ space in the
                 telecom industry is still challenged in terms of IT spend; service provider
                 companies, especially small companies, are looking for new opportunities in
                 Europe and Asia Pacific. Other than telecom, management indicated that the deal
                 pipeline in financial services and healthcare looks promising.

                 Exhibit 6: Revenue growth (Service wise – CC basis)
                                                          % to revenue   % growth (qoq)    % growth (yoy)
                 Global media and telecom                        14.9             (2.9)             (2.8)
                 Financial solutions                             26.6             (1.1)             10.5
                 Manufacturing and hi-tech                       19.1              2.4               8.2
                 Healthcare, life sciences and services          10.0              1.7               6.7
                 Retail and transportation                       15.4              5.2              10.2
                 Energy and utilities                            14.0              5.1              50.4
                 Source: Company, Angel Research

                 Geography wise, Wipro reported revenue growth across all its geographies, except
                 Japan. Revenue from APAC and other emerging markets grew by 6.2% qoq (CC
                 terms). Revenue from America and India and Middle East posted 1.0% and 4.1%
                 qoq (CC terms) growth, respectively.




April 25, 2012                                                                                          4
                                                                                 Wipro | 4QFY2012 Result Update




                 Exhibit 7: Revenue growth (Geography wise, CC basis)
                                                                    % to revenue       % growth (qoq)        % growth (yoy)
                 America                                                     52.1                     1.0                  6.1
                 Europe                                                      27.7                     0.4                 11.3
                 Japan                                                           1.1                (16.7)               (21.3)
                 India and Middle East                                           9.6                  4.1                 27.7
                 APAC and other emerging markets                                 9.5                  6.2                 36.3
                 Source: Company, Angel Research


                 Segmental performance
                 During the quarter, the IT services segment’s revenue came in at US$1,536mn, up
                 2.0% qoq, with India and Middle East business being the major growth driver,
                 posting 6.4% qoq growth. Revenue from global IT services came in at
                 US$1,159mn, up 1.5% qoq, while revenue from BPO services declined by 1.6%
                 qoq to US$126mn.

                 Exhibit 8: IT services – Revenue growth (qoq)
                       12
                                    9.8
                                                                      7.5
                       8       7.7
                                                                                                               6.4

                                          4.2                        4.7         4.6    4.3
                       4     2.7
                 (%)




                                                  2.3                                                2.2
                                                                                                                         2.0
                                                              0.5                                            1.5
                                                                            (1.0)              (1.2)
                       0
                              4QFY11                  1QFY12           2QFY12             3QFY12               4QFY12
                                                                                                                 (1.6)
                       (4)
                                                      (4.4)
                                                          (4.6)                           (5.0)
                       (8)
                                          Global IT        India and Middle East         BPO            IT services

                 Source: Company, Angel Research



                 Exhibit 9: Global IT services revenue trend
                       7
                                                                           6.0
                       6

                       5                                                   4.6

                       4
                                   4.2
                 (%)




                       3                                                                      2.2
                                                        1.8                                                        2.0
                                   1.9
                       2
                                                                                              1.8
                       1                                0.5

                       0                                                                                           0.8
                             4QFY11                   1QFY12          2QFY12             3QFY12                4QFY12

                                         Global IT volume growth              IT services revenue growth (in USD)

                 Source: Company, Angel Research




April 25, 2012                                                                                                                 5
                                                                              Wipro | 4QFY2012 Result Update




                 The IT products segment reported merely 2.9% yoy growth in revenue to `937cr
                 during the quarter. The consumer care and lighting segment posted another strong
                 quarter with 25.2% yoy growth in revenue to `907cr, with brands like Yardley,
                 Santoor and Chandrika bolstering growth. In the lighting business, Wipro is
                 gaining traction in its eco-energy business, which involves managing energy
                 through the use of renewable products.

                 Exhibit 10: IT products – Revenue growth (yoy)
                          1,200                                                                               25

                                                           20.9
                          1,100
                                                                                                              15

                          1,000
                 (` cr)




                                                    1,006            1,001                            2.9      5




                                                                                                                    (%)
                                  2.3                                                    2.4
                           900                                                                      937
                                        911                                           900
                                                                             (6.4)                            (5)
                           800


                           700                                                                                (15)
                                  4QFY11           1QFY12           2QFY12           3QFY12        4QFY12

                                                      IT products                 yoy growth (%)

                 Source: Company, Angel Research



                 Exhibit 11: Consumer care and lighting – Revenue growth (yoy)
                           950                                                                                29

                           900                                                              26.4              27
                                                                                                    907
                           850                                                        879                 25.2 25

                           800                                                                                23
                 (` cr)




                                                                     800




                                                                                                                    (%)
                           750                                                                                21
                                                     755                   20.3
                                          19.1
                           700      724                                                                       19

                           650                             17.6                                               17

                           600                                                                                15
                                  4QFY11          1QFY12            2QFY12           3QFY12        4QFY12

                                              Consumer care and lightening               yoy growth (%)

                 Source: Company, Angel Research


                 On a consolidated level, Wipro’s revenue came in at `9,869cr, down 1.3% qoq.

                 Hiring and utilization

                 Wipro reported net reduction of 814 employees in its IT services employee base,
                 which was a negative surprise with its employee base now standing at 135,920.
                 Management attributed this to the transition going on in the company, which is
                 leading to people shifting offshore. Gross hiring during the quarter was healthy at
                 ~7,000. Voluntary attritions (annualized) in global IT business increased slightly to
                 14.4% in 4QFY2012 from 14.2% in 3QFY2012. Also, attrition rate (quarterly) in
                 BPO increased to 15.1% in 4QFY2012 from 13.9% in 3QFY2012.

April 25, 2012                                                                                                        6
                                                                                  Wipro | 4QFY2012 Result Update




                 Exhibit 12: Employee pyramid
                 Employee pyramid                           4QFY11          1QFY12       2QFY12       3QFY12         4QFY12
                 Utilization – Global IT (%)                      68.9          69.7        69.3        67.1           67.4
                 Attrition (%)
                       Global IT                                  20.9          23.2        18.5        14.2           14.4
                       BPO                                        15.5          15.3        14.1        13.9           15.1
                 Net additions                                   2,894        4,105       5,240        5,004           (814)
                 Source: Company, Angel Research

                 Utilization rate of the global IT business improved slightly by 30bp qoq to 67.4%.
                 As per management, of the total hiring to be done in FY2012, ~70% was of
                 freshers, which in turn did not give utilization level much headroom to scale up.
                 Going ahead, increased utilization level will be an important margin lever.

                 Margins decline slightly

                 During 4QFY2012, Wipro reported a decline in EBIT margin across all its business
                 segments. EBIT margin of the IT services segment declined slightly by 8bp qoq to
                 20.7%. EBIT margin of the IT products business segment and consumer care and
                 lighting business segment declined by 60bp and 61bp qoq to 4.7% and 12.5%,
                 respectively. On a consolidated level, Wipro’s EBIT declined by 8bp qoq to 17.2%.

                 Exhibit 13: Segment-wise EBIT margin trend
                       25          22.1                22.0
                                                                                           20.8           20.7
                                                                           20.0
                       20
                                           17.8                 17.5                          17.2              17.2
                                                                                  16.4
                       15
                                      12.0                  11.9                              11.9             12.5
                 (%)




                                                                                  11.0
                       10

                                                          4.2                                  5.3             4.7
                       5               3.6                                    4.5


                       0
                                 4QFY11              1QFY12              2QFY12          3QFY12         4QFY12

                             IT services          IT products          Consumer care and lightening      Consolidated

                 Source: Company, Angel Research


                 Client pyramid

                 Wipro added 41 new clients in 4QFY2012 but its active client base reduced to 943
                 in 4QFY2012 from 953 in 3QFY2012. The company’s client pyramid witnessed
                 qualitative improvement, with one client getting added in the US$100mn plus
                 revenue bracket and one client in the US$75mn-100mn revenue bracket. Two
                 clients from the US$10mn-20mn bracket moved to the US$20mn-50mn revenue
                 bracket. The company witnessed addition of 11 clients in the US$5mn-10mn
                 revenue bracket.




April 25, 2012                                                                                                          7
                                                                     Wipro | 4QFY2012 Result Update




                 Exhibit 14: Client metrics
                 Particulars                  4QFY11        1QFY12      2QFY12     3QFY12     4QFY12
                 US$100mn plus                         3         4           5           6         7
                 US$75mn–$100mn                        9         8           8           8         9
                 US$50mn–$75mn                         10       12          11           11        9
                 US$20mn–$50mn                         46       45          46           48       50
                 US$10mn–$20mn                         49       49          50           48       46
                 US$5mn–$10mn                          63       77          72           76       87
                 US$3mn–$5mn                           75       63          75           87       84
                 US$1mn–$3mn                          174      180         195          178      183
                 New clients                           68       49          44           39       41
                 Active customers                     904      937         930          953      943
                 Source: Company, Angel Research


                 Outlook and valuation

                 As per management, the company witnessed pressure from clients in India
                 business, which led to delays in project closures. For 1QFY2013, management has
                 given USD revenue guidance of US$1,520mn-1,550mn, which translates into qoq
                 growth of -1 to 1% qoq, which is extremely subdued. Now, management’s
                 endeavor is to grow at par with industry’s average revenue growth in FY2013.
                 Nasscom has guided for 11-14% yoy USD revenue growth for FY2013 – to
                 achieve this Wipro needs to record at least 3.5% qoq USD revenue growth post
                 1QFY2013. This number indicates that management is banking more on back-
                 ended growth for FY2013, which makes us slightly cautious about the company’s
                 growth outlook. We expect USD and INR revenue CAGR for IT services to be at
                 10.3% and 11.0%, respectively over FY2012-14E.

                 At the operating front, Wipro has tailwinds of improving utilization level and
                 headwinds such as wage inflation and moderate volume growth, which are
                 expected to pull down its margins to some extent. We expect EBIT margin of the IT
                 services segment to slide down to 20.2% in FY2013 from 20.8% in FY2012.
                 We expect a 12.1% and 12.3% CAGR in EBITDA and PAT over FY2012-14E.
                 We value the stock at 15x FY2014E EPS of `28.6, which gives us a target price of
                 `430. We recommend Neutral on the stock.

                 Exhibit 15: Key assumptions
                                                                             FY2013           FY2014
                 Revenue growth – IT services (USD)                               9.5           11.0
                 USD-INR rate (realized)                                         49.0           49.0
                 Revenue growth – Consolidated (`)                               11.7           11.8
                 EBITDA margin (%)                                               19.4           19.9
                 Tax rate (%)                                                    21.0           24.0
                 EPS growth (%)                                                  10.5           14.3
                 Source: Company, Angel Research




April 25, 2012                                                                                     8
                                                                                                                                         Wipro | 4QFY2012 Result Update




                                              Exhibit 16: Change in estimates
                                                                                                      FY2013E                                                        FY2014E
                                              Parameter                            Earlier              Revised             Variation                  Earlier              Revised       Variation
                                              (` cr)                         estimates                estimates                         (%)        estimates           estimates                      (%)
                                              Net revenue                        43,249                 41,918                    (3.1)                48,043               46,879                (2.4)
                                              EBITDA                                8,507                8,118                    (4.6)                 9,254                 9,320                   0.7
                                              Other income                                960                    819          (14.7)                    1,627                 1,216              (25.2)
                                              PBT                                   8,327                7,812                    (6.2)                 9,610                 9,276               (3.5)
                                              Tax                                   1,665                1,641                    (1.5)                 2,162                 2,226                   3.0
                                              PAT                                   6,641                6,152                    (7.4)                 7,427                 7,030               (5.3)
                                              Source: Company, Angel Research



                                              Exhibit 17: One-year forward PE chart
                                                    950

                                                    800

                                                    650

                                                    500
                                              (`)




                                                    350

                                                    200

                                                    50
                                                                    Oct-06




                                                                                             Oct-07




                                                                                                                   Oct-08




                                                                                                                                              Oct-09




                                                                                                                                                                   Oct-10




                                                                                                                                                                                        Oct-11
                                                          Apr-06




                                                                                 Apr-07




                                                                                                        Apr-08




                                                                                                                               Apr-09




                                                                                                                                                        Apr-10




                                                                                                                                                                               Apr-11




                                                                                                                                                                                                   Apr-12
                                                                             Price                     34x                   28x                       21x                   14x                 7x

                                              Source: Company, Angel Research


Exhibit 18: Recommendation summary
 Company                 Reco.         CMP    Tgt. price           Upside                  FY2014E                FY2014E                     FY2011-14E                    FY2014E          FY2014E
                                        (`)             (`)             (%)               EBITDA (%)                   P/E (x)           EPS CAGR (%)                       RoCE (%)             RoE (%)
 HCL Tech                Accumulate    508             560           10.3                         17.4                  11.8                              17.0                  20.4               21.3
 Hexaware                Neutral       130                 -                 -                    18.3                  12.6                              53.4                  24.1               21.6
 Infosys                 Buy          2,349         2,792            18.9                         30.6                  13.5                              13.4                  22.8               20.8
 Infotech Enterprises    Accumulate    159             177           11.1                         16.6                      8.6                           13.9                  16.9               13.2
 KPIT Cummins            Buy            83              98           18.7                         14.9                      7.6                           (1.4)                 20.0               18.0
 Mahindra Satyam         Buy            74              89           19.5                         15.0                      9.0                           25.3                  11.4               13.0
 MindTree                Accumulate    548             585              6.8                       15.5                      9.4                           32.9                  19.8               17.0
 MphasiS                 Buy           356             433           21.6                         17.9                      8.6                              1.7                14.1               13.7
 NIIT                    Buy            45              61           36.0                         16.9                      4.9                           18.0                  11.5               19.0
 Persistent              Neutral       354                 -                 -                    22.4                      8.8                              4.7                17.0               14.5
 TCS                     Accumulate   1,172         1,276               8.8                       28.7                  16.5                              16.8                  28.8               27.7
 Tech Mahindra           Accumulate    688             750              9.1                       15.7                      7.9                           20.8                  12.9               18.0
 Wipro                   Neutral       410                 -                 -                    19.9                  14.3                                 9.7                13.9               18.3
 Source: Company, Angel Research




April 25, 2012                                                                                                                                                                                          9
                                                                 Wipro | 4QFY2012 Result Update




                 Profit & Loss account (Consolidated, IFRS)
                 Y/E March (` cr)                    FY2010*   FY2011   FY2012   FY2013E   FY2014E
                 Net revenue                          27,124   31,099   37,525    41,918    46,879
                 Cost of revenues                     18,630   21,285   26,317    29,390    32,740
                 Gross profit                          8,494    9,814   11,207    12,529    14,139
                 % of net sales                         31.3     31.6     29.9      29.9      30.2
                 Selling and mktg exp.                 1,861    2,218    2,778     3,240     3,627
                 % of net sales                          6.9      7.1      7.4       7.7       7.7
                 General and admin exp.                1,482    1,829    2,029     2,315     2,472
                 % of net sales                          5.5      5.9      5.4       5.5       5.3
                 Depreciation and amortization          783      821     1,013     1,144     1,280
                 % of net sales                          2.9      2.6      2.7       2.7       2.7
                 EBIT                                  5,151    5,767    6,401     6,974     8,040
                 % of net sales                         19.0     18.5     17.1      16.6      17.2
                 Other income, net                      337      472      541       819      1,216
                 Share in profits of eq. acc. ass.       53      64.8     33.3       20        20
                 Profit before tax                     5,541    6,303    6,975     7,812     9,276
                 Provision for tax                      929      971     1,376     1,641     2,226
                 % of PBT                               16.8     15.4     19.7      21.0      24.0
                 PAT                                   4,612    5,332    5,599     6,172     7,050
                 Share in earnings of associate            -        -        -         -        1
                 Minority interest                       18       35       26        20        20
                 Adj. PAT                              4,594    5,297    5,573     6,152     7,030
                 Diluted EPS (`)                        18.9     21.7     22.7      25.1      28.6
                 Note: *Adjusted for 2:3 bonus




April 25, 2012                                                                                 10
                                                                   Wipro | 4QFY2012 Result Update




                 Balance sheet (Consolidated, IFRS)
                 Y/E March ( cr)                         FY2010*   FY2011   FY2012 FY2013E FY2014E
                 Assets
                 Goodwill                                  5,380    5,482    6,794    6,794    6,794
                 Intangible assets                          401      355      423      500      500
                 Property, plant & equipment               5,346    5,509    5,899    5,954    5,875
                 Investment in equ. acc. investees          235      299      323      400      400
                 Derivative assets                          120      298      346      500      500
                 Non-current tax assets                     346      924     1,029    1,338    1,234
                 Deferred tax assets                        169      147      260      300      300
                 Other non-current assets                   878      898     1,178    1,469    1,477
                 Total non-current assets                 12,875   13,913   16,251   17,255   17,079
                 Inventories                                793      971     1,066    1,034    1,156
                 Trade receivables                         5,093    6,163    8,033    8,039    8,990
                 Other current assets                      2,111    1,974    2,574    2,632    2,700
                 Unbilled revenues                         1,671    2,415    3,003    3,101    3,468
                 Available for sale investments            3,042    4,928    4,196    9,411   12,799
                 Current tax assets                         660      496      564      780      800
                 Derivative assets                          262      171      147      247      250
                 Cash and cash equivalents                 6,488    6,114    7,767    7,700   10,421
                 Total current assets                     20,118   23,231   27,349   32,943   40,584
                 Total assets                             32,993   37,144   43,600   50,199   57,663
                 Equity
                 Share capital                              294      491      492      492      492
                 Share premium                             2,919    3,012    3,046    3,046    3,046
                 Retained earnings                        16,579   20,325   24,191   28,620   33,928
                 Share based payment reserve                314      136      198      198      198
                 Other components of equity                (440)      58      659      659      659
                 Shares held by controlled trust            (54)     (54)     (54)     (54)     (54)
                 Equity attrib. to shareholders of Co.    19,611   23,968   28,531   32,960   38,268
                 Minority interest                           44       69       85       85       85
                 Total equity                             19,655   24,037   28,616   33,045   38,353
                 Liabilities
                 Long term loans and borrowings            1,811    1,976    2,251    2,401    2,551
                 Deferred tax liability                      38       30       35       70       80
                 Derivative liabilities                     288      259       31      350      370
                 Non-current tax liability                  307      502      540      700      850
                 Other non-current liabilities              323      271      352      400      450
                 Provisions                                  10        8        6       16       15
                 Total non-current liabilities            2776.7   3045.3   3215.3    3937     4316
                 Loans and bank overdraft                  4,440    3,304    3,645    3,978    4,350
                 Trade payables                            3,875    4,405    4,726    5,636    6,369
                 Unearned revenues                          746      660      957      750      900
                 Current tax liabilities                    485      734      723      780      850
                 Derivative liabilities                     138      136      635      635      635
                 Other current liabilities                  650      591      970     1,220    1,620
                 Provisions                                 227      232      112      216      270
                 Total current liabilities                10,561   10,062   11,769   13,216   14,994
                 Total liabilities                        13,338   13,107   14,984   17,153   19,310
                 Total equity and liabilities             32,993   37,144   43,600   50,199   57,663
                 Note: *Adjusted for 2:3 bonus




April 25, 2012                                                                                   11
                                                                   Wipro | 4QFY2012 Result Update




                 Cash flow statement (Consolidated, IFRS)
                 Y/E March (` cr)                      FY2010*    FY2011    FY2012    FY2013E    FY2014E
                 Pre tax profit from operations          5,204     5,832     6,434      6,994      8,060
                 Depreciation                              783       821     1,013      1,144      1,280
                 Expenses (deferred)/written off           (18)      (35)      (26)       (20)       (20)
                 Pre tax cash from operations            5,969     6,618     7,422      8,118      9,320
                 Other income/prior period ad              337       472       541        819      1,216
                 Net cash from operations                6,306     7,090     7,962      8,937     10,536
                 Tax                                     (929)     (971)    (1,376)    (1,641)    (2,226)
                 Cash profits                            5,377     6,119     6,586      7,296      8,310
                 (Inc)/dec in current assets            (1,076)   (1,601)   (3,197)     (447)     (1,531)
                 Inc/(dec) in current liab.                237     (499)     1,707      1,448      1,778
                 Net trade working capital               (840)    (2,101)   (1,490)     1,001        247
                 Cashflow from oper. actv.               4,537     4,018     5,096      8,297      8,557
                 (Inc)/dec in fixed assets              (1,150)    (985)    (1,402)    (1,200)    (1,200)
                 (Inc)/dec in intangibles                  182       (56)   (1,380)       (77)          -
                 (Inc)/dec in investments               (1,455)   (1,951)      708     (5,291)    (3,389)
                 (Inc)/dec in net def. tax assets          268        22     (113)        (40)          -
                 (Inc)/dec in derivative assets          (120)     (178)       (48)     (154)           -
                 (Inc)/dec in non-current tax asset      (346)     (578)     (105)      (310)        104
                 (Inc)/dec in minority interest             20        25        16           -          -
                 Inc/(dec) in other non-current liab     (436)       103     (105)        572        229
                 (Inc)/dec in other non-current ast.       (70)      (20)    (280)      (290)         (8)
                 Cashflow from investing activities     (3,107)   (3,616)   (2,709)    (6,791)    (4,263)
                 Inc/(dec) in debt                       (157)       165       275        150        150
                 Inc/(dec) in equity/premium               982       617       713          0          0
                 Dividends                               (679)    (1,558)   (1,723)    (1,723)    (1,723)
                 Cashflow from financing activities        146     (775)     (735)     (1,573)    (1,573)
                 Cash generated/(utilized)               1,576     (374)     1,653        (67)     2,721
                 Cash at start of the year               4,912     6,488     6,114      7,767      7,700
                 Cash at end of the year                 6,488     6,114     7,767      7,700     10,421
                 Note: *Adjusted for 2:3 bonus




April 25, 2012                                                                                        12
                                                                  Wipro | 4QFY2012 Result Update




                 Key Ratios
                 Y/E March                             FY2010*   FY2011   FY2012   FY2013E   FY2014E
                 Valuation ratio(x)
                 P/E (on FDEPS)                           21.7     18.9     18.1      16.4      14.3
                 P/CEPS                                    9.3      9.1      8.4       7.7       6.7
                 P/BVPS                                    4.6      4.2      3.5       3.0       2.6
                 Dividend yield (%)                        1.0      1.5      1.5       1.5       1.5
                 EV/Sales                                  3.4      2.9      2.4       2.1       1.7
                 EV/EBITDA                                15.7     13.9     12.3      10.6       8.6
                 EV/Total assets                           2.8      2.5      2.1       1.7       1.4
                 Per share data (`)
                 EPS (Fully diluted)                      18.9     21.7     22.7      25.1      28.6
                 Cash EPS                                 44.3     45.1     48.8      53.5      61.4
                 Dividend                                  4.0      6.0      6.0       6.0       6.0
                 Book value                               89.3     98.0    116.6     134.7     156.3
                 DuPont analysis
                 Tax retention ratio (PAT/PBT)             0.8      0.8      0.8       0.8       0.8
                 Cost of debt (PBT/EBIT)                   7.1      7.7      6.9       6.8       7.2
                 EBIT margin (EBIT/Sales)                  0.0      0.0      0.0       0.0       0.0
                 Asset turnover ratio (Sales/Assets)       0.8      0.8      0.9       0.8       0.8
                 Leverage ratio (Assets/Equity)            1.7      1.5      1.5       1.5       1.5
                 Operating ROE                            23.5     22.2     19.6      18.7      18.4
                 Return ratios (%)
                 RoCE (pre-tax)                           15.6     15.5     14.7      13.9      13.9
                 Angel RoIC                               28.5     28.0     25.8      26.5      29.1
                 RoE                                      23.4     22.0     19.5      18.6      18.3
                 Turnover ratios (x)
                 Asset turnover(fixed assets)              0.9      0.9      0.9       0.9       0.9
                 Receivables days                          67       66       69        70        66
                 Payable days                              79       71       63        64        67
                 Note: *Adjusted for 2:3 bonus




April 25, 2012                                                                                   13
                                                                                                       Wipro | 4QFY2012 Result Update




  Research Team Tel: 022 - 3935 7800                  E-mail: research@angelbroking.com                    Website: www.angelbroking.com

  DISCLAIMER

  This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
  decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
  such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
  referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
  risks of such an investment.

  Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
  investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
  document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

  Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
  trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
  fundamentals.

  The information in this document has been printed on the basis of publicly available information, internal data and other reliable
  sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
  document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
  responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
  Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
  nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
  Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
  compliance, or other reasons that prevent us from doing so.

  This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
  redistributed or passed on, directly or indirectly.

  Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
  other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
  the past.

  Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
  connection with the use of this information.

  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 Limited 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%)                      Accumulate (5% to 15%)                 Neutral (-5 to 5%)
                                  Reduce (-5% to 15%)              Sell (< -15%)


April 25, 2012                                                                                                                             14

				
Pratik Modi Pratik Modi CMD www.mpmodi.in
About Myself Pratik, BMS student, from Mumbai University, having all types of projects & personal notes