Balchandra Kemkar

G11075
Company Name: Wipro Technologies Limited
DCF Valuation, Figures estimated 2011 onwards

Date
BSE Sensex Closing Daily Return
Infosys Close Price
Return
1-Nov-10
20355.63
423.45
2-Nov-10
20345.69
-0.05%
434 2.49%
3-Nov-10
20465.74
0.59%
434.65 0.15%
4-Nov-10
20893.57
2.09%
436.05 0.32%
5-Nov-10
21004.96
0.53%
438.15 0.48%
8-Nov-10
20852.38
-0.73%
432 -1.40%
9-Nov-10
20932.48
0.38%
432.2 0.05%
10-Nov-10
20875.71
-0.27%
435.65 0.80%
11-Nov-10
20589.09
-1.37%
430.05 -1.29%
12-Nov-10
20156.89
-2.10%
425.2 -1.13%
15-Nov-10
20309.69
0.76%
433.15 1.87%
16-Nov-10
19865.14
-2.19%
421.65 -2.65%
18-Nov-10
19930.64
0.33%
418.45 -0.76%
19-Nov-10
19585.44
-1.73%
401.65 -4.01%
22-Nov-10
19957.59
1.90%
418.35 4.16%
23-Nov-10
19691.84
-1.33%
417.2 -0.27%
24-Nov-10
19459.85
-1.18%
409.1 -1.94%
25-Nov-10
19318.16
-0.73%
408.85 -0.06%
26-Nov-10
19136.61
-0.94%
406.6 -0.55%
29-Nov-10
19405.1
1.40%
416.4 2.41%
30-Nov-10
19521.25
0.60%
420.2 0.91%
1-Dec-10
19850
1.68%
414.55 -1.34%
2-Dec-10
19992.7
0.72%
425.2 2.57%
3-Dec-10
19966.93
-0.13%
428.1 0.68%
6-Dec-10
19981.31
0.07%
430.85 0.64%
7-Dec-10
19934.64
-0.23%
434.75 0.91%
8-Dec-10
19696.48
-1.19%
434 -0.17%
9-Dec-10
19242.36
-2.31%
436.9 0.67%
10-Dec-10
19508.89
1.39%
450 3.00%
13-Dec-10
19691.78
0.94%
448.4 -0.36%
14-Dec-10
19799.19
0.55%
453.1 1.05%
15-Dec-10
19647.77
-0.76%
457.4 0.95%
16-Dec-10
19864.85
1.10%
469.8 2.71%
20-Dec-10
19888.88
0.12%
478 1.75%
21-Dec-10
20060.32
0.86%
485.35 1.54%
22-Dec-10
20015.8
-0.22%
478.45 -1.42%
23-Dec-10
19982.88
-0.16%
479.55 0.23%
24-Dec-10
20073.66
0.45%
481.95 0.50%
27-Dec-10
20028.93
-0.22%
485.05 0.64%
28-Dec-10
20025.42
-0.02%
491.4 1.31%
29-Dec-10
20256.03
1.15%
488.15 -0.66%
30-Dec-10
20389.07
0.66%
489.3 0.24%
31-Dec-10
20509.09
0.59%
490.25 0.19%

Covariance
Standard Dev
Beta

9.64366E-05
0.010962747
0.802422646

Cost of Equity using CAPM

Ke = Rj = Rf + (Rm - Rf)j
Beta
Rf = Risk free rate
Rm - Rf = Market risk premium
Cost of Equity using CAPM
Total Equity Rs Cr
Total Debt Rs Cr

0.8
7.42%
8.50%
14.220%
1271.83
12258

Proportion

Cost

Debt

0.00

0.00%

Equity

1.00

231.41%

WACC =

Major Assumptions
a. Company runs on Equity with Zero Debt
b. All the dividends are reserved as Reserves and Surplus for coming years.

Cost of Equity using DDM

Cost of Debt

Dividend model

Rs Lakhs

Ke=D1/Po+g

Total Loans

12258

g= constant growth forever

Interest Paid

860.34

Interest Rate

7.02%

Market price

442

Last dividend

1723

Dividend growth rate forever

12.00%

Cost of equity =

448.60%

Proportion x Cost
0.0000
2.3141
231.41%

Valuation done for 10 years, growth estimated as avearage

of previous years for first 5 years and 8% for next 5 years
For final enterprise value see below
In Mn
In Mn
Consolidated Profit and Loss Account
2010
2011
Income from Software Services
272,129
310,385
Increase in Sales %
14%
Software Development and BPM expenses
186,881
212,719
Expenses as % of Income
0.686737 0.68533918
Gross Profit
Selling and Marketing Expenses
S & M Expense as % of Income
General Expenses
GE as % of Income

85248
97666
19,147
22,757
0.07036 0.07331862
15,382
19,114
0.056525 0.06158158

Operating Profit before Depreciation and Interest

Depreciation
Dep in %

50718.93 55794.9267
5,796
6,001
0.114277 0.10755458

Opearating Profit before Interest

Other Income
Other Income as % of Income

44922.93 49793.9267
8,667
6,033
0.031849 0.01943715

Net Profit before Tax, Interest

Provision for Tax
Provision for Tax as % of NPBTI

53589.93 55826.9267
7908.00
8618.00
0.147565 0.15436995

Net PAT and Before Interest

Interest

45681.93 47208.9267
0
0

Profit after Tax

Balance Brought Forward
Add: Intercompany Dividend
net Balance Brought Forward
Balance % increase

45681.93 47208.9267
1,144
1,144
0
16
1144
1160
0.01398601

Net Amount Available

46825.93 48368.9267

Free Cash Flow

52621.93 54369.9267

erprise value see below

Assumption
2012
2013
2014
2015
2016
347631.2 389346.9 436068.6 488396.8 547004.4
12%
12%
12%
12%
12%
12%
243341.8 272542.9
305248 341877.8 382903.1
70%
70%
70%
70%
70%
70%
104289.4 116804.1 130820.6
146519 164101.3
24334.18 27254.29 30524.8 34187.78 38290.31
7%
20857.87 23360.82 26164.11 29303.81 32820.27
6%
59097.3 66188.98 74131.66 83027.46 92990.75
6500.703 7280.788 8154.482 9133.02 10228.98
11%
52596.6 58908.19 65977.18 73894.44 82761.77
6952.624 7786.939 8721.372 9767.936 10940.09
2%
59549.22 66695.13 74698.55 83662.37 93701.86
9527.88 10671.22 11951.77 13385.98 14992.30
16%
50021.35 56023.91 62746.78 70276.39 78709.56
0
0
0
0
0
50021.35 56023.91 62746.78 70276.39 78709.56

15000

15000

15000

15000

15000

30%
65021.35 71023.91 77746.78 85276.39 93709.56
71522.05

78304.7 85901.26 94409.41 103938.5