Declaration: "Ebit & Eps of Wipro Limited" Project Report
Declaration: "Ebit & Eps of Wipro Limited" Project Report
Declaration: "Ebit & Eps of Wipro Limited" Project Report
,
New Delhi 110070 Website: www.srisiim.org
Financial Management
Submitted to:-
Submitted By:-
Declaration
Upendra kumar
Parshant Kumar
Rohit Kumar
(PGDM 2013-2015)
ACKNOWLEDGEMENT
Parshant Kumar
ROHIT KUMAR
Upendra Kumar
About Wipro
"Applying Thought"
Type
Public
Traded as
BSE: 507685
NSE: WIPRO
NYSE: WIT
BSE SENSEX Constituent
CNX Nifty Constituent
Industry
IT services, IT consulting
Founded
Founder(s)
M.H. Premji
Headquarters
India
Area served
Worldwide
Key people
[1]
T K Kurien (CEO)
Services
Revenue
[2]
Operating income
[2]
Profit
Total assets
[2]
Total equity
[2]
Employees
Website
www.wipro.com
[2]
[3]
History
Early formative years
The company was incorporated on 29 December 1945, in Mumbai by
Mohamed Premji as 'Western India Products Limited', later abbreviated to
'Wipro'. It was initially set up as a manufacturer of vegetable and refined
oils in Amalner, district Jalgaon, Maharashtra, under the trade names of
Kisan, Sunflower and Camel.The company logo still contains a sunflower to
reflect products of the original business.
In 1966, after Mohamed Premjis death, his son Azim Premji returned home
from Stanford University and took over Wipro as its chairman at the age of
21.
During the 1970s and 1980s, the company shifted its focus to new
business opportunities in the IT and computing industry, which was at a
nascent stage in India at the time. On 7 June 1977, the name of the
company changed from Western India Vegetable Products Limited, to
Wipro Products Limited.
The year 1980 marked the arrival of Wipro in the IT domain. In 1982, the
name was changed from Wipro Products Limited to Wipro
Limited. Meanwhile Wipro continued to expand in the consumer products
domain with the launch of "Ralak" a tulsi-based family soap and "Wipro
Jasmine", a toilet soap
3QFY14 2QFY14
112,713 107,727
25,923 22,845
20,147 19,321
QoQ
(%) 3QFY13 YoY(%)
FY11
FY12E FY13E FY14E
4.6%
NA
NA 374,256 434,232 500,927 552,640
13.5%
NA
NA 76,743 95,946 112,973 124,432
4.3%
NA
NA 61,362 76,543 88,307 98,651
25.0
31.1
35.9
40.1
22.2
17.8
15.5
13.9
16.6
12.7
10.2
8.7
23.3%
25.7% 23.9% 22.6%
Verticals and Service line traction : Healthcare & Life sciences(up 7.6% QoQ in
constant currency), financial services (up 3.1% QoQ) and Energy& Utilities (up
4.8% QoQ in cc) drove growth on vertical front. USA (up 3.2% QoQ), Europe
(up 3% QoQ in cc), India and Middle East (up 5.5% QoQ in cc) drove growth on
geographic front. Global infrastructure services (up 5.6% QoQ), BPO (up 4.1%
QoQ) delivered growth on service line front.
Company has been showing consistent traction in top 10 accounts over the
past nine quarters. Revenues from top 10 clients (up 3.8% QoQ) accounted for
~23% of total revenues. Company indicated at identifying the next set of 125
strategic accounts to drive growth. Wipro cited that CY14 IT budgets would be
flat with an upward bias.
Utilisation (ex-trainees) at 74.3% was flat QoQ. We see scope for improvement
in utilisation rates in FY15E which could act as a margin lever. Forex hedges as
at the end of the quarter stood at US $1.5bn.
IT services revenues at US$ 1,678mn, up 2.9% QoQ, were marginally below
our expectation (US$ 1,684mn)
IT services EBIT margins at 23% improved by 50bps on a sequential basis, ahead
of estimates (22.1%). Company guided that automation and improving
efficiencies in delivery model aiding margin improvement
QUARTERLY FINANCIALS SNAPSHOT
(Rs mn)
US$ Revenues(US$ mn)
Net sales and services
Cost of sales and services
Selling and marketing expenses
General and administrative expenses
EBIDTA
Other income
Interest
Foreign exchange gain/(loss)
Depreciation
Profit Before Taxation
Provision for taxation including fringe benefit tax
Minority interest
Profit to Equity holders of the company
MARGIN ANALYSIS
Margin Analysis
3QFY14
Cost of Sales
65.2%
S&M/Sales
6.8%
G&A/Sales
5.1%
EBIDTA Margin
23.0%
Tax rates
23.0%
NPM
17.9%
Source: Company, HDFC sec Inst Research
EBIT Margins (%)
IT Services
IT Products
3QFY14
1,678
112,713
73,466
7,619
5,705
25,923
3,812
898
604
3,109
26,332
6060
125
20,147
2QFY14
66.6%
6.9%
5.2%
21.2%
22.9%
17.9%
2QFY14
1,631
107,727
71,758
7,473
5,651
22,845
3,412
656
2,193
2,616
25,178
5754
103
19,321
QoQ (bps)
(143.1)
(17.7)
(18.4)
179.3
16.1
(6.1)
3QFY14
23.0%
(1.1)%
3QFY13
67.2%
8.3%
5.7%
18.8%
20.2%
15.3%
2QFY14
22.5%
1.6%
QoQ
2.9%
4.6%
13.5%
4.3%
YoY(bps)
(204)
(155)
(59)
418
283
262
QoQ (bps)
50
(270)
53.0
51.7
52.5
52.1 51.6
51.5
49.9
50.1
49.7
49.8
49.9
Europe
India &
Middle
28.6
28.8
28.2
27.7 28.1
28.2
29.6
28.5
29.0
28.9
29.6
9.0
9.3
9.1
8.8
8.6
8.8
9.4
8.8
8.3
8.5
9.4
10.2
10.2
10.6 11.5
11.5
11.7
12.0
12.5
13.0
12.0
East
APAC and
other
Emerging
Markets
9.6
REVENUES BY GEOGRAPHY
3QFY14
2QFY14
QoQ growth
(%)
3QFY13
Americas
838
812
3.1
787
Europe
497
471
5.4
467
143
135
5.4
139
201
212
(5.0)
187
YoY
growth (%)
6
.
4
6
.
4
2
.
8
7
.
8
16.8 15.7
26.7 27.1
19.7 19.0
15.4
27.3
19.0
14.9 14.9
26.6 26.4
19.1 19.4
10.2
10.0
10.0 10.1
9.8
Q4FY13 1QFY14
14.4 14.3 13.8 13.6
27.0 26.9 26.3 26.5
19.0 18.7 19.3 19.1
9.5
9.9 10.1
9.8
4
13.9
26.4
19.0
4
13.7
26.4
18.6
10.1
10.6
15.0 14.7 14.9 15.4 15 15.0 15.1 15.1 15.1 14.8 14.6
11.6 13.7 13.4 14.0 14.2 15.1 15.1 15.4 15.9 15.8 16.1
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
VERTICAL-WISE REVENUES
Vertical (US$ mn)
Global Media and Telecom
Finance Solutions
Manufacturing and Hi-tech
Healthcare and Life Sciences and
Services
Retail and Transportation
Energy and Utilities
3QFY14
229.9
443.1
312.2
2QFY14
226.7
430.6
309.9
QoQ growth
(%)
1.4
2.9
0.7
3QFY13
225.5
424.2
294.9
YoY growth
(%)
2.0
4.5
5.9
177.9
245.0
270.2
164.7
241.4
257.7
8.0
1.5
4.9
156.1
238.1
238.1
14.0
2.9
13.5
24.5 24.2
24.2
24.9
7.5
7.4
7.2
31.4 31.3
8.8 8.8
31.9
8.6
31.7
8.7
7.5 7.5
20.7 20.7
7.6
20.3
7.6
19.9
Services
Analytics and
Information
6.0
Management
Business Application
Services
BPO
Product Engineering &
Mobility
ADM
6.4
6.6
6.6
6.8
7.1
7.1
7.1
7.1
CLIENT METRICS
Client Details
Top customer
Top five customers
Top 10 customers
> 100 mn
>75 mn
> 50 mn
>20 mn
> 10 mn
> 5 mn
> 3 mn
> 1 mn
Total Number of
Customers
Number of new
customers
4
12
24
69
118
195
258
438
5
13
24
70
120
192
267
462
6
14
25
73
121
197
284
462
7
16
25
75
121
208
292
475
8
14
25
73
131
213
302
478
9
16
25
71
133
218
293
475
10
16
26
73
132
214
293
484
10
16
26
76
133
213
291
490
10
15
27
76
133
218
281
492
10
15
27
78
137
220
282
487
11
15
28
80
136
218
280
495
904
937
930
953
943
919
939
966
978
946
942
966
68
49
44
39
41
37
53
50
52
28
45
42
Total
Net additions
Global IT services excl
IFOX-
4,105
5,240 5,004
2,907
1,469
(65)
(814)
66.0%
72.9%
74.3%
14.3%
16.3%
Gross
Global IT service execl
IFOXNet
Global IT services execl
IFOXNet excluding trainees
Attritions
Voluntary TTM
Voluntary Quarterly
Annualized
Involuntary attrition
2.0%
1.3%
1.6%
2.5% 3.2%
3.5%
4.0%
3.7%
4.9%
5.6%
4.2%
Annualized
PEER VALUATIONS
CMP
Mcap
(Rs)
(Rs bn)
Infosys
3,727
2,130
20.4
17.4
15.9
16.5
13.7
11.3
TCS
2,220
4,345
71.1
23.0
19.3
17.0
23.6
16.6
13.6
557
1,367
25.0
31.2
36.0
22.2
17.8
15.5
13.9
15.3
12.3
10.2
HCL Tech
1,381
968
58.1
85.2
16.2
14.2
12.8
15.9
10.5
9.0
Tech M
1,771
410
15.1
13.7
12.1
13.2
9.6
8.7
Wipro
EPS
P/E
EV/EBIDTA
FY11 FY12E FY13E FY14E FY11 FY12E FY13E FY14E FY12 FY13E FY14E FY14E FY13
40.1
ROE (%)
FY12 FY13 FY14
E
E
E
24.3
25.7% %
24.7
%
23.4
%
42.2
11.7 40.8% %
25.7
8.7 23.3% %
36.3
7.6 32.7% %
34.4
7.5 33.5% %
38.9
%
23.9
%
31.9
%
28.7
%
35.0
%
22.6
%
28.2
%
25.7
%
9.2
Assumption
IT services revenues(US$ mn)
Growth(%)
Average Exchange rate
Cost of Sales
S&M of Sales
G&A as a % of Sales
Consolidated EBIDTA margin(%)
ASSUMPTIONS
FY10
5,921
13.4%
47.96
67.8%
5.6%
5.8%
20.8%
FY11
6,218
5.0%
54.43
67.1%
6.5%
5.9%
20.5%
FY12E
6,632
6.7%
60.13
65.8%
6.9%
5.2%
22.1%
FY13E
7,531
13.5%
61.00
65.8%
6.7%
4.9%
22.6%
FY14E
8,495
12.8%
60.00
66.0%
6.6%
4.9%
22.5%
CHANGE IN ESTIMATES
FY13E
Revenues
EBIDTA
PAT
EPS
New
434,232
95,946
76,543
31.1
Old
433,762
93,090
74,861
30.4
FY14E
%
Change
0.1%
3.1%
2.2%
2.3%
New
500,927
112,973
88,307
35.9
Old % Change
495,783
1.0%
108,029
4.6%
84,864
4.1%
34.5
4.0%
INCOME STATEMENT
(Rs mn)
Net Sales
Growth (%)
Cost of Software
development
Selling and marketing
expenses
General and Admin
expenses
EBIDTA Profits
EBIDTA Profit Margin (%)
Depreciation
EBIT
Other Income
Interest
Forex
PBT
Tax
PAT
Minority Interest
APAT
FY10
FY11 FY12E FY13E FY14E
318,747 374,256 434,232 500,927 552,640
17.4% 16.0% 15.4% 10.3%
216,040 251,268 285,664 329,742 364,654
17,953 24,213
18,416
66,338
20.8%
9,754
56,584
8,982
3,371
3,328
65,523
12,955
52,568
243
21.29
88,307 98,651
17.3%
24.7%
15.4%
11.7%
25.0
31.1
35.9
40.1
17.2%
24.7%
15.4%
11.7%
BALANCE SHEET
50,525
1,714
54,756
FY12E
4,926
335,251
340,177
1,171
854
62,962
63,816
846
9
14,578
420,597
51,270
1,714
54,756
FY13E
4,926
397,641
402,567
1,171
854
62,962
63,816
846
9
16,374
484,783
50,502
1,714
54,756
3,232
Investments
41,961
69,171
69,171
69,171
69,171
Inventories
10,662
3,263
3,596
4,117
4,542
Unbilled Revenues
30,025
31,988
31,938
35,065
38,685
Trade Receivables
80,328
76,635
77,913
82,344
90,845
77,666
20,852
37,524
257,057
47,258
32,858
1,121
81,237
175,820
2,597
354,764
84,838
20,798
41,807
259,329
48,067
32,537
1,174
81,778
177,551
4,235
357,952
144,949
21,177
45,933
325,505
50,583
32,547
2,924
86,054
239,451
4,235
420,597
210,086
21,377
50,120
403,109
59,288
36,292
3,124
98,704
304,405
4,235
484,783
277,044
21,577
54,142
486,834
66,922
39,438
3,324
109,685
377,149
4,235
555,994
Share Capital
Reserves
Total Shareholders Funds
Minority Interest
Long Term Debt
Short Term Debt
Total Debt
Deferred Taxes
Long Term Provisions
Others
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Net Block
Intangible assets
Goodwill
Investment in equity accounted
FY10
4,917
280,397
285,314
849
22,510
36,448
58,958
353
61
9,229
354,764
FY11
4,926
278,886
283,812
1,171
854
62,962
63,816
846
9
8,298
357,952
58,988
4,229
67,937
FY14E
4,926
467,350
472,276
1,171
854
62,962
63,816
846
9
17,876
555,994
48,968
1,714
54,756
Investee
CASH FLOW
(Rs mn)
Reported PAT
Non operating &Interest Income
Depreciation
Non Operating and E0 Items
Working Capital Change
FY10
55,987
(7,651)
10,129
17,198
(35,587)
FY11
66,696
(9,417)
10,835
17,565
(15,257)
FY12E
79,820
(13,885)
11,255
22,140
(17,649)
FY13E
88,307
(15,100)
12,768
25,733
(23,753)
FY14E
98,651
(17,400)
13,534
28,736
(33,021)
40,076
(12,977)
70,422
(10,616)
81,680
(12,000)
87,954
(12,000)
90,499
(12,000)
27,099
4,921
(8,056)
22
712
(902)
(17,229)
59,806
(42,794)
(53,410)
9
11,394
(1,044)
(17,080)
69,680
13,885
1,885
(23,455)
75,954
15,100
3,100
(25,917)
78,499
17,400
5,400
(28,941)
(6,721)
10,291
789
84,838
(23,455)
60,111
144,949
(17,397)
14,623
1,680
77,666
(25,917)
65,137
210,086
(28,941)
66,958
277,044
KEY RATIOS
FY10
FY11
FY12E
FY13E
FY14E
GPM
32.2%
32.9%
34.2%
34.2%
34.0%
EBITDA Margin
20.8%
20.5%
22.1%
22.6%
22.5%
EBIT Margin
17.8%
18.0%
19.5%
20.0%
20.1%
APAT Margin
16.5%
16.5%
17.7%
17.7%
17.9%
RoE
21.2%
23.3%
25.7%
23.9%
22.6%
RoCE
18.4%
19.8%
21.9%
20.6%
19.9%
ROIC
25.3%
28.0%
37.2%
41.3%
45.7%
19.8%
21.5%
22.3%
22.5%
22.5%
1.09
1.24
1.08
1.07
1.03
Unbilled Revenues
28
29
27
27
26
Debtors (days)
79
65
65
60
60
Payables (days)
23
13
13
14
15
84
81
79
73
71
Debt/EBITDA (x)
0.8
0.8
0.6
0.6
0.5
-0.2
-0.3
-0.4
-0.5
-0.6
EPS (Rs/sh)
21.36
25.01
31.18
35.97
40.14
CEPS (Rs/sh)
25.44
28.98
35.92
41.30
45.78
BV (Rs/sh)
116.1
115.4
138.2
163.6
191.9
DPS
5.7
7.0
8.1
9.0
10.1
P/E
26.0
22.2
17.8
15.5
13.9
4.8
4.8
4.0
3.4
2.9
EV/EBITDA
19.6
16.6
12.7
10.2
8.7
EV/Revenues
4.08
3.40
2.80
2.29
1.96
1.0%
1.3%
1.5%
1.6%
1.8%
FCFE/Mcap(%)
1.4%
4.1%
5.1%
5.6%
5.7%
OCF/EV
3.1%
5.5%
6.7%
7.7%
8.4%
FCF/EV
1.5%
4.5%
5.7%
6.6%
7.3%
PROFITABILITY (%)
EFFICIENCY
Tax Rate (%)
Net D/E
Interest Coverage ratio
VALUATION
P/BV
Jan-14
Dec-13
Nov-13
Oct-13
Wipro
Sep- 13
Aug-13
Jul- 13
680
Jun-13
Apr-13
May13
Mar-13
Feb-13
Jan-13
RECOMMENDATION HISTORY
TP
630
580
530
480
430
380
330
280
Date
21-Jan-13
21-Apr-13
29-Jul-13
7-Oct-13
23-Oct-13
20-Jan-14
CMP
397
370
381
483
515
557
Reco
UPF
UPF
BUY
BUY
BUY
BUY
Target
413
359
438
510
550
640
Rating Definitions
BUY : Where the stock is expected to deliver more than 10% returns over the
next 12 month period
NEUTRAL: Where the stock is expected to deliver (-)10% to 10% returns over the
next 12 month period
SELL : Where the stock is expected to deliver less than (-)10% returns over the
next 12 month period
Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant
for sole use by the recipient and not for circulation. The information and
opinions contained herein have been compiled or arrived at, based upon
information obtained in good faith from sources believed to be reliable. Such
information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy,
completeness or correctness. All such information and opinions are subject to
change without notice. This document is for information purposes only.
Descriptions of any company or companies or their securities mentioned herein
are not intended to be complete and this document is not, and should not be
construed as an offer or solicitation of an offer, to buy or sell any securities or
other financial instruments.
This report is not directed to, or intended for display, downloading, printing,
reproducing or for distribution to or use by, any person or entity who is a citizen
or resident or located in any locality, state, country or other jurisdiction where
such distribution, publication, reproduction, availability or use would be contrary
to law or regulation or what would subject HDFC Securities Ltd or its affiliates to
any registration or licensing requirement within such jurisdiction.
If this report is inadvertently send or has reached any individual in such country,
especially, USA, the same may be ignored and brought to the attention of the
sender. This document may not be reproduced, distributed or published for any
purposes without prior written approval of HDFC Securities Ltd .
Foreign currencies denominated securities, wherever mentioned, are subject to
exchange rate fluctuations, which could have an adverse effect on their value or
price, or the income derived from them. In addition, investors in securities such
as ADRs, the values of which are influenced by foreign currencies effectively
assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy
any security. HDFC Securities Ltd may from time to time solicit from, or perform
broking, or other services for, any company mentioned in this mail and/or its
attachments.
HDFC Securities and its affiliated company(ies), their directors and employees
may; (a) from time to time, have a long or short position in, and buy or sell the
securities of the company(ies) mentioned herein or (b) be engaged in any other
transaction involving such securities and earn brokerage or other compensation
or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies) or
may have any other potential conflict of interests with respect to any
recommendation and other related information and opinions.
HDFC Securities Ltd, its directors, analysts or employees do not take any
responsibility, financial or otherwise, of the losses or the damages sustained due
to the investments made or any action taken on basis of this report, including
but not restricted to, fluctuation in the prices of shares and bonds, changes in
the currency rates, diminution in the NAVs, reduction in the dividend or income,
etc.
HDFC Securities Ltd and other group companies, its directors, associates,
employees may have various positions in any of the stocks, securities and
financial instruments dealt in the report, or may make sell or purchase or other
deals in these securities from time to time or may deal in other securities of the
companies / organisations described in this report.