Beruflich Dokumente
Kultur Dokumente
Wipro reported weaker than expected performance for Q2FY15, with revenue and
margin missing the expectation. Moreover, the guidance was softer than
PLe/Consensus expectation. Management is still confident of improving growth
momentum in H2FY15 on the back of large deal wins. Moreover, return of
discretionary spend in the US and Outsourcing penetration in Continental Europe
makesdemandoutlookhealthier.RetainBUY.
October22,2014
ShashiBhusan
shashibhusan@plindia.com
+912266322300
1,432.3
2,454.0
2263
H2FY15 likely to be stronger, but client specific issues drags near term:
Management continues to assert for stronger H2FY15 than H1FY15. However,
the weakness in Q3FY15 guidance was attributed to rampdown in selected
clientsinCommodityrelatedsectorduetoweaknessinprice.However,thereis
nolossinwalletsharewithclients.Themanagementseesimprovementindeal
pipelinealongwithimprovedwinrate.Weexpectrevenuegrowthtoaccelerate
inQ4FY15yieldingstrongerFY15exitrate.
73.43%
9.09%
4.55%
12.93%
Valuation&RecommendationRetainBUY,withreviseTPofRs650:Wesee
improvementinthewinratetodriverevenuemomentuminCY15,alongwith
available margin levers that would accelerate earnings momentum. However,
weseeneartermweaknessinstockduetoweakerthanexpectedguidance.We
retainBUYrating,withareviseTPofRs650,16xFY16Eearningsestimate.
HussainKagzi
hussainkagzi@plindia.com
+912266322242
Rating
Price
TargetPrice
ImpliedUpside
Sensex
Nifty
BUY
Rs584
Rs650
11.3%
26,787
7,996
(PricesasonOctober22,2014)
Tradingdata
MarketCap.(Rsbn)
Shareso/s(m)
3MAvg.Dailyvalue(Rsm)
Majorshareholders
Promoters
Foreign
DomesticInst.
Public&Other
StockPerformance
(%)
1M
6M
Absolute
0.4
10.0
Relative
1.9
(7.7)
HowwedifferfromConsensus
EPS(Rs)
PL
Cons.
2015
35.5
35.6
2016
40.0
40.0
12M
13.4
(15.0)
%Diff.
0.2
0.1
PricePerformance(RIC:WIPR.BO,BB:WPROIN)
Keyfinancials(Y/eMarch)
Revenues(Rsm)
Growth(%)
EBITDA(Rsm)
PAT(Rsm)
EPS(Rs)
Growth(%)
NetDPS(Rs)
2013
374,256
17.4
78,181
61,684
25.0
17.1
6.9
2014
434,269
16.0
97,101
78,394
31.8
26.9
9.4
2015E
475,294
9.4
105,279
87,605
35.5
11.7
9.0
2016E
524,138
10.3
115,015
98,656
40.0
12.6
9.0
2013
20.9
21.7
20.5
3.6
17.3
23.3
5.1
1.2
2014
22.4
25.0
24.2
3.1
13.8
18.4
4.2
1.6
2015E
22.2
23.3
22.3
2.7
12.0
16.4
3.5
1.5
2016E
21.9
22.1
21.3
2.3
10.3
14.6
3.0
1.5
Oct14
Aug14
Jun14
Apr14
Feb14
Dec13
Oct13
(Rs)
700
600
500
400
300
200
100
0
Source:Bloomberg
Profitability&Valuation
EBITDAmargin(%)
RoE(%)
RoCE(%)
EV/sales(x)
EV/EBITDA(x)
PE(x)
P/BV(x)
Netdividendyield(%)
Source:CompanyData;PLResearch
PrabhudasLilladherPvt.Ltd.and/oritsassociates(the'Firm')doesand/orseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresultinvestorsshouldbeawarethat
theFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthereport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.
Pleaserefertoimportantdisclosuresanddisclaimersattheendofthereport
Q2FY15ResultUpdate
Crosscurrency&clientissueserodedotherwiseinlinequarter
Wipro
ConferenceCallHighlights
Positives
Guidance:US$1,8081,842m(2to4%QoQgrowth)
(Exhibit:2,5)
Hunting:50newclientwins/Farmingcontinuestobethefocus
(Exhibit:9)
GrossUtilization:70.0%(Q1FY15:68.7%),
NetUtilization(excl.Support):77.5%(Q1FY15:76%)
NetUtilization(excl.Trainees):79.4%(Q1FY15:77.9%
(Exhibit:10)
HealthcareandLifesciencesgrew5.6%QoQ(17%YoY)
Negatives
Operatingmarginerodedby175bpsto18.6%
Topclientgrewby3.7%QoQ
Top25clientsgrew1.3%QoQ
Top610clientsgrew+4.2%QoQ
(Exhibit:8)
Hedge:US$2.1bn
Voluntaryquarterlyannualizedattritionat16.9%(Q1FY15:17%)
Source:PLResearch
Analysis
Webelieveguidanceof3%QoQisjustshortofconsensus/PLe
expectation.Weaknessinguidancewaslargelyattributedtoramp
downswithtopclientsrelatedtocommodity(Energy&
Manufacturing).WeexpectmomentumtogetstrongerinH2FY15.
Hence,weexpectrevenuemomentumtogetstrongerinFY16.
Wearefactoringin~7.5%YoYgrowthinUSDterminFY15.
Wiprosinvestmentinclienthuntinghasstartedshowingtraction.The
newlogowinshavemoderatedthisquarterbutthequalityoflarge
dealwinshasimproved.Managementindicatedfocusonmining
newer/smallerclientsthathashigherpropensitytospend.However,
focusandstrategyofminingthelargeclientscontinues.
WiprohasmadesteadyinvestmentinS&M(0.9%QoQ).Accordingto
themanagement,theinvestmentmadebythecompanyisinthevalue
creationteam(moreofsolutionarchitect).Theinvestmentislikelyto
helpthecompanywinmoreoflargedealswhereinthecustomeris
lookingtorestructuretheirinfrastructure.
Utilizationforthecompanystartedinchingupafterhittingthelowest
levelinQ3FY14(sinceQ4FY07)acrossallthethreemeasured
parameters.Utilizationhasincreasedsteadilyandlikelytofurthergo
upfromhere.
Webelieve,thecompanyhasmadeinvestmentsinresourceswhich
couldbeutilizedtounleashgrowthopportunities.Theassuringbody
languageofthemanagemententhuseconfidenceregardinglarge
dealclosures,forwhich,thecompanymusthavemadeinvestments.
Managementwasconfidentaboutgrowthinthevertical.Accordingto
them,theconsolidationinpharmaceuticalindustry,IPsinpayerside
andregulationchangesinproviderssideisdrivingthegrowth.They
continuetoexpectstronggrowthinthevertical.Manufacturingand
HiTechareexpectedtogrowaheadofgroupsrevenue,whereas
weaknessinretailislikelytopersist.
Analysis
Operatingmarginerosionforthequarterwashigherthanexpectation
despitetailwindsduetocurrencydepreciation,utilization
improvement,offshoreshift,andFPPimprovement.Themanagement
soundedoptimisticaboutpossibilityofmarginimprovementin
H2FY15.
Wiprosfocusonclientmininghitroadblockduetorampdownsin
coupleoftop10clients.TheirinvestmentinfarmingwithMegaand
GammaaccountshasresultedingoodmomentumwithTop5
accountsonYoYbasis.
Weexpecthorizonofclientminingto138clientstostartshowing
results.However,thefocusnowshiftstominingsmaller/newclients.
Wiprohasabiggerhedgebookthanitspeers.However,ithas
declinedonQoQbasis.
Managementwasconfidentaboutmanagingtheattritionandseesno
supplysideconstraintforthecompany.ThekeyareawhereinWiprois
witnessinghighattritionis25yearsofexperienceandnicheskills
(likeSMAC).
However,themanagementseesnopressureonmarginduewage
inflation.
October22,2014
Exhibit1:
Wipro
Missedexpectationonallcounts
IFRSConsolidated(RSm)
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoY
PL(e)
Cons(e)
Var(PLe)
1,772
1,740
1.8%
1,678
5.5%
1,792
1,793
1.1%
116,838.0
111,358
4.9%
110,053
6.2%
115,812
116,783
0.9%
21,739.0
22,673
4.1%
22,555.0
3.6%
23,162.5
23,943
6.1%
18.6%
20.4%
175bps
20.5%
189bps
20.0%
20.5%
139bps
PBT(Rsm)
27,182.0
27,122
0.2%
27,504
1.2%
28,055
27,435
3.1%
Tax(Rsm)
6,199.0
5,942
4.3%
5,754
7.7%
6,172
6,248
0.4%
TaxRate
22.8%
21.9%
90bps
20.9%
188bps
22.0%
22.8%
81bps
PAT(Rsm)
20,848.0
21,032
0.9%
21,647
3.7%
21,866
21,187
4.7%
8.47
8.55
0.9%
8.81
3.8%
8.90
8.61
4.8%
CombinedITRevenue(US$m)
ConsolidatedSales(Rsm)
OperatingProfit(Rsm)
OPM
EPS(Rs)
Source:CompanyData,Bloomberg,PLResearch
Exhibit2:
GuidanceBelowPLe/Consensusexpectation
ITServicesRev(US$m)
QoQGrowth
1541
1577
1585
1588
1631
1678
1720
1,740
1.7%
2.3%
0.5%
0.2%
2.7%
2.9%
2.5%
1.2%
1.8%
2.1%
4.0%
3.0%
Source:CompanyData,Bloomberg,PLResearch
Exhibit3: RevisingestimatesdownforFY15andFY16
New
Old
Revision
FY15E
FY16E
FY15E
FY16E
FY15E
FY16E
475,294
524,138
488,922
545,933
2.8%
4.0%
OperatingMargin(%)
19.5%
19.5%
20.3%
20.7%
83bp
120bp
EPS(Rs)
35.68
40.13
36.13
41.91
1.3%
4.2%
Revenue(Rsmn)
TargetPrice(Rs)
650
680
4.4%
Source:CompanyData,PLResearch
Exhibit4: BFSIandGMTdroverevenuedecline,Manufacturingimpactedmargindecline
SegmentRevenue(inUS$mn)
Q2FY15
QoQ
YoY
FinancialServices
460.6
0.9%
7.0%
Healthcare&Lifesciences
197.4
5.6%
19.8%
Retail&CPG
246.7
1.2%
2.1%
Energy&Utility
297.2
6.7%
15.4%
ManufacturingandHiTech
322.5
1.9%
4.2%
Media&Telecom
246.5
1.2%
8.5%
FinancialServices
22.0%
(162)
(53)
Healthcare&Lifesciences
19.9%
102
118
Retail&CPG
21.1%
(59)
(74)
Energy&Utility
27.3%
21
48
ManufacturingandHiTech
20.3%
(258)
(323)
Media&Telecom
23.0%
(197)
48
SegmentMargins
Source:CompanyData,PLResearch
October22,2014
Wipro
Exhibit5: SeasonalityimpactsrevenuegrowthinH1,likelytobouncebackinH2
ITSvcsUSDrevsQoQGr.
6%
4%
2%
0%
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15(avg)
2%
Source:CompanyData,PLResearch
Exhibit6: AsteadyimprovementinFPPAprecursortohyperautomationbenefits
FixedPrice
80%
Time&Material
65%
50%
35%
Q1FY15
Q3FY14
Q1FY14
Q3FY13
Q1FY13
Q3FY12
Q1FY12
Q3FY11
Q1FY11
Q3FY10
Q1FY10
Q3FY09
Q1FY09
Q3FY08
Q1FY08
20%
Source:CompanyData,PLResearch
Exhibit7: RevenueguidanceforQ3FY15fallingjustshortofinflatedconsensusexpectation
IT Svc revs ($m)
QoQ Gr (%)
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
6%
4%
2%
0%
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15g
2%
Source:CompanyData,PLResearch
October22,2014
Wipro
Exhibit8: Weaknessintopclientsduetorampdown,projectclosuresandrampupdelays
TopClient
Top25Clients
Top610Clients
NonTop10Clients
20%
15%
10%
5%
0%
5%
Q2FY09
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
10%
Source:CompanyData,PLResearch
Exhibit9: HuntingfocusledbyinvestmentsinS&Mhasresultedinstrongclientaddition
70
60
59
59
53
49
50
44
39
40
37
29312831
30
36
31
26
50
45
394137
29
27
5052
42
35
28
22
20
20
Q2FY08
Q3FY08
Q4FY08
Q1FY09
Q2FY09
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
10
Source:CompanyData,PLResearch
Exhibit10: UtilizationuptickManagementseesmoreroomforimprovement
GrossUtilization
Utilization(ExclSupport)
Utilization(ExclTraining)
84.5%
79.5%
74.5%
69.5%
Q1FY09
Q2FY09
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
64.5%
Source:CompanyData,PLResearch
October22,2014
Wipro
Exhibit11: Revenuebyservices
Practices(ITServices+BPOSales)
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
TechnologyInfrastructureServices
474.8
440.3
7.8%
399.5
18.9%
TestingServices
203.7
196.6
3.6%
193.0
5.5%
PackageImplementation
515.5
499.4
3.2%
481.7
7.0%
BPO
163.0
168.8
3.4%
144.3
12.9%
ADM
290.5
313.2
7.3%
339.0
14.3%
ProductEngineering
124.0
121.8
1.8%
120.8
2.6%
35.4
34.8
1.8%
42.0
15.6%
TechnologyInfrastructureServices
26.8%
25.3%
150bps
23.8%
300bps
TestingServices
11.5%
11.3%
20bps
11.5%
0bps
PackageImplementation
29.1%
28.7%
40bps
28.7%
40bps
BPO
9.2%
9.7%
50bps
8.6%
60bps
ADM
16.4%
18.0% 160bps
Consulting
%of(ITServices+BPOSales)
20.2%
380bps
ProductEngineering
7.0%
7.0%
0bps
7.2%
20bps
Consulting
2.0%
2.0%
0bps
2.5%
50bps
Q1FY15 QoQgr.
Q2FY14
YoYgr.
Source:CompanyData,PLResearch
Exhibit12: RevenuebyVerticals
VerticalsComponent
Q2FY15
GlobalMedia&Telecom
246.2
248.8
1.0%
233.3
5.5%
FinanceSolutions
460.6
464.6
0.9%
443.1
3.9%
Manufacturing&Hitech
322.4
316.7
1.8%
318.9
1.1%
HealthcareandLifeSciences
198.4
187.9
5.6%
169.5
17.0%
RetailandTransportation
246.2
243.6
1.1%
248.4
0.9%
Energy&Utilities
297.6
278.4
6.9%
265.2
12.2%
GlobalMedia&Telecom
13.9%
14.3%
40bps
13.9%
0bps
FinanceSolutions
26.0%
26.7%
70bps
26.4%
40bps
Manufacturing&Hitech
18.2%
18.2%
0bps
19.0%
80bps
HealthcareandLifeSciences
11.2%
10.8%
40bps
10.1%
110bps
RetailandTransportation
13.9%
14.0%
10bps
14.8%
90bps
Energy&Utilities
16.8%
16.0%
80bps
15.8%
100bps
%ofTotal
Source:CompanyData,PLResearch
October22,2014
Wipro
Exhibit13: RevenuebyGeography
GeoSpread
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
US
903.5
866.6
4.3%
835.8
8.1%
Europe
492.5
515.1
4.4%
485.1
1.5%
India&MEbusiness
163.0
158.4
2.9%
139.3
17.0%
OtherEmergingMarkets
212.6
200.1
6.2%
218.2
2.6%
US
51.0%
49.8%
120bps
49.8%
120bps
Europe
27.8%
29.6% 180bps
%ofTotal
India&MEbusiness
OtherEmergingMarkets
28.9%
110bps
9.2%
9.1%
10bps
8.3%
90bps
12.0%
11.5%
50bps
13.0%
100bps
Source:CompanyData,PLResearch
Exhibit14: Clientadditionacrossbucket
CustomerSizeDistribution
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
Total>1$m
524
US$1mUS$3m
292
511
2.5%
487
7.6%
293
0.3%
282
3.5%
US$3mUS$5m
225
224
0.4%
220
2.3%
US$5mUS$10m
150
143
4.9%
137
9.5%
US$10mUS$20m
85
84
1.2%
78
9.0%
US$20mUS$50m
30
29
3.4%
27
11.1%
>US$50m
15
14
7.1%
15
0.0%
>US$100m
10
10
0.0%
10
0.0%
Source:CompanyData,PLResearch
Exhibit15: HRmetrics
PeopleManagement
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
154,297
147,452
4.6%
147,216
4.8%
GrossUtilization
70.0%
68.7%
130bps
66.1%
390bps
NetUtilization(excl.Support)
77.5%
76.0%
150bps
73.0%
450bps
NetUtilization(excl.Trainees)
79.4%
77.9%
150bps
74.3%
510bps
VoluntaryTTM
16.5%
16.1%
40bps
13.5%
300bps
VoluntaryQuarterlyAnnualized
16.9%
17.0%
10bps
15.4%
150bps
InvoluntaryQuarterlyAnnualized
12.0%
11.8%
20bps
12.1%
10bps
BPO%Quarterly
10.0%
10.1%
10bps
9.0%
100bps
11,328
11,174
1.4%
11,328
0.0%
154,297
147,452
4.6%
147,216
4.8%
ClosingHeadcount
Attrition
ITServicesexclBPOandI&ME
BPO%PostTraining
Sales&SupportStaff(ITServices)(avg)
Source:CompanyData,PLResearch
October22,2014
Wipro
Exhibit16: Customerconcentration
CustomerManagement
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
24.8
7.0
256.3%
15.1
64.2%
1746.7
1733.2
0.8%
1663.3
5.0%
50
35
42.9%
45
11.1%
1018
1022
0.4%
942
8.1%
TopCustomer
62.0
64.4
3.7%
63.8
2.8%
Top25Clients
166.5
168.8
1.3%
169.5
1.8%
Top5
228.5
233.2
2.0%
233.3
2.0%
Top610
152.3
146.2
4.2%
149.4
2.0%
Top10
380.9
379.4
0.4%
382.7
0.5%
1390.6
1360.8
2.2%
1295.7
7.3%
1.4%
0.4%
100bps
0.9%
55.6%
RevenuefromnewCustomers
Revenuefromrepeatbusinesses
Numberofnewcustomers
TotalNumberofactivecustomers
CustomerConcentration
NonTop10customers
RevenuefromnewCustomers(%)
CustomerConcentration
TopCustomer
3.5%
3.7%
20bps
3.8%
30bps
Top5
12.9%
13.4%
50bps
13.9%
100bps
Top10
21.5%
21.8%
30bps
22.8%
130bps
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
Onsite
693
699
0.9%
679
2.1%
Offshore
597
587
1.7%
574
4.0%
1290.0
1286.0
0.3%
1253.0
3.0%
Q2FY15
Q1FY15
QoQgr.
Q2FY14
YoYgr.
RevenuefromFPP
685.0
670.0
2.2%
603.9
13.4%
RevenuefromT&M
605.0
616.0
1.8%
649.1
6.8%
OnsiteRevenue
692.7
698.3
0.8%
679.1
2.0%
OffshoreRevenue
597.3
587.7
1.6%
573.9
4.1%
RevenuefromFPP
53.1%
52.1%
100bps
48.2%
490bps
OnsiteRevenue
53.7%
54.3%
60bps
54.2%
50bps
OffshoreRevenue
46.3%
45.7%
60bps
45.8%
50bps
Source:CompanyData,PLResearch
Exhibit17: ITServicesrevenue
Revenuein$m
Total
Source:CompanyData,PLResearch
Exhibit18: Onsite/Offshorerevenue
ServiceDelivery
%ofTotal
Source:CompanyData,PLResearch
October22,2014
IncomeStatement(Rsm)
Y/eMarch
2013
NetRevenue
RawMaterialExpenses
GrossProfit
EmployeeCost
OtherExpenses
EBITDA
Depr.&Amortization
NetInterest
OtherIncome
ProfitbeforeTax
TotalTax
ProfitafterTax
ExOditems/Min.Int.
Adj.PAT
Avg.SharesO/S(m)
EPS(Rs.)
374,256
260,665
113,591
35,410
78,181
10,835
11,250
78,596
16,912
61,684
61,684
2,463.0
25.0
2014
2015E
2016E
434,269
295,488
138,781
41,680
97,101
11,106
52
15,062
101,005
22,601
78,404
62
78,394
2,466.0
31.8
475,294
325,513
149,781
44,503
105,279
12,773
20,065
112,571
24,766
87,805
200
87,605
2,466.0
35.5
524,138
359,598
164,540
49,525
115,015
12,911
24,506
126,610
27,854
98,756
100
98,656
2,466.0
40.0
Wipro
BalanceSheetAbstract(Rsm)
Y/eMarch
2013
2014
2015E
2016E
283,812
854
10,324
294,990
50,525
56,470
69,222
86,084
84,838
145,986
144,740
32,689
294,990
343,499
10,909
11,440
365,848
51,449
65,358
60,843
147,899
114,201
170,154
136,456
40,299
365,848
409,011
10,909
11,440
431,360
52,935
65,358
60,843
211,925
189,748
184,663
162,486
40,299
431,360
485,573
10,909
11,440
507,922
55,748
65,358
60,843
285,674
259,913
203,264
177,503
40,299
507,922
QuarterlyFinancials(Rsm)
Y/eMarch
Q3FY14
Q4FY14
Q1FY15
Q2FY15
NetRevenue
EBITDA
%ofrevenue
Depr.&Amortization
NetInterest
OtherIncome
ProfitbeforeTax
TotalTax
ProfitafterTax
Adj.PAT
116,535
28,180
24.2
2,880
3,627
28,927
6,536
22,391
22,391
111,358
25,507
22.9
2,834
4,449
27,122
5,942
21,032
21,032
116,838
24,814
21.2
3,075
5,443
27,182
6,199
20,848
20,848
Shareholder'sFunds
TotalDebt
OtherLiabilities
TotalLiabilities
NetFixedAssets
Goodwill
Investments
NetCurrentAssets
Cash&Equivalents
OtherCurrentAssets
CurrentLiabilities
OtherAssets
TotalAssets
CashFlowAbstract(Rsm)
Y/eMarch
C/FfromOperations
C/FfromInvesting
C/FfromFinancing
Inc./Dec.inCash
OpeningCash
ClosingCash
FCFF
FCFE
2013
2014
2015E
2016E
70,422
(53,410)
(9,840)
7,172
77,666
84,838
109,865
88,209
67,895
(2,774)
(35,041)
30,080
84,121
114,201
45,262
55,317
111,899
(14,259)
(22,093)
75,547
114,201
189,748
97,640
97,640
107,983
(15,724)
(22,093)
70,166
189,748
259,913
92,259
92,259
KeyFinancialMetrics
Y/eMarch
Growth
Revenue(%)
EBITDA(%)
PAT(%)
EPS(%)
Profitability
EBITDAMargin(%)
PATMargin(%)
RoCE(%)
RoE(%)
BalanceSheet
NetDebt:Equity
NetWrkngCap.(days)
Valuation
PER(x)
P/B(x)
EV/EBITDA(x)
EV/Sales(x)
EarningsQuality
112,713
25,923
23.0
3,109
3,518
26,332
6,060
20,397
20,397
2013
2014
2015E
17.4
17.2
17.3
17.1
16.0
24.2
27.1
26.9
9.4
8.4
11.7
11.7
10.3
9.2
12.6
12.6
22.2
18.4
22.3
23.3
21.9
18.8
21.3
22.1
(0.4)
7
(0.5)
8
16.4
3.5
12.0
2.7
14.6
3.0
10.3
2.3
22.0
17.8
10.0
111.5
22.0
19.4
9.0
93.5
20.9
16.5
20.5
21.7
22.4
18.1
24.2
25.0
(0.3)
(2)
(0.3)
(6)
23.3
5.1
17.3
3.6
18.4
4.2
13.8
3.1
Eff.TaxRate
21.5
OtherInc/PBT
14.3
Eff.Depr.Rate(%)
10.7
FCFE/PAT
143.0
Source:CompanyData,PLResearch.
22.4
14.9
9.8
70.6
2016E
KeyOperatingMetrics
Y/eMarch
ITSvcsRevs($mn)
Pricing(US$/Hr)
Currency(USDINR)
Sw.Devp.Cost(%ofSales)
SG&A(%ofSales)
Revenue(US$m)
EBITDAMarginExpansion/(Erosion)(bps)
TaxRate(%)
Source:CompanyData,PLResearch.
2013
2014
2015E
2016E
7,238
147.0
22.4
7,856
(20.9)
22.0
8,884
(20.7)
22.0
October22,2014
Wipro
PrabhudasLilladherPvt.Ltd.
3rdFloor,SadhanaHouse,570,P.B.Marg,Worli,Mumbai400018,India
Tel:(9122)66322222Fax:(9122)66322209
RatingDistributionofResearchCoverage
%ofTotalCoverage
60%
51.9%
50%
40%
31.7%
30%
16.3%
20%
10%
0.0%
0%
BUY
Accumulate
Reduce
Sell
PLsRecommendationNomenclature
BUY
Over15%OutperformancetoSensexover12months
Accumulate
: OutperformancetoSensexover12months
Reduce
UnderperformancetoSensexover12months
Sell
: Over15%underperformancetoSensexover12months
TradingBuy
Over10%absoluteupsidein1month
TradingSell
: Over10%absolutedeclinein1month
NotRated(NR)
Nospecificcallonthestock
UnderReview(UR)
: Ratinglikelytochangeshortly
This document has been prepared by the Research Division of Prabhudas Lilladher Pvt. Ltd. Mumbai, India (PL) and is meant for use by the recipient only as
informationandisnotforcirculation.ThisdocumentisnottobereportedorcopiedormadeavailabletootherswithoutpriorpermissionofPL.Itshouldnotbe
consideredortakenasanoffertosellorasolicitationtobuyorsellanysecurity.
Theinformationcontainedinthisreporthasbeenobtainedfromsourcesthatareconsideredtobereliable.However,PLhasnotindependentlyverifiedtheaccuracy
orcompletenessofthesame.NeitherPLnoranyofitsaffiliates,itsdirectorsoritsemployeesacceptanyresponsibilityofwhatsoevernaturefortheinformation,
statementsandopiniongiven,madeavailableorexpressedhereinorforanyomissiontherein.
Recipientsofthisreportshouldbeawarethatpastperformanceisnotnecessarilyaguidetofutureperformanceandvalueofinvestmentscangodownaswell.The
suitability or otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an
independentexpert/advisor.
EitherPLoritsaffiliatesoritsdirectorsoritsemployeesoritsrepresentativesoritsclientsortheirrelativesmayhaveposition(s),makemarket,actasprincipalor
engageintransactionsofsecuritiesofcompaniesreferredtointhisreportandtheymayhaveusedtheresearchmaterialpriortopublication.
Wemayfromtimetotimesolicitorperforminvestmentbankingorotherservicesforanycompanymentionedinthisdocument.
October22,2014
10