Wipro Ltd (WIPRO) | 269content.icicidirect.com/mailimages/IDirect_Wipro_Q1FY18.pdf · infrastructure services (28.1%, 1%). Product engineering services (7% of revenue) declined 1.6%

July 21, 2017

ICICI Securities Ltd | Retail Equity Research

Result Update

Expects industry leading growth by Q4FY18…

IT services US$ revenues grew 0.8% QoQ to $1971.1 million, above

our 0.5% decline and $1,945 million estimate

Consolidated revenues declined 3.1% QoQ to | 13,626 crore and

were above our expectation of | 13,369 crore. The decline was led

by revenue decline in IT services (2.8% QoQ) and IT products

business (4.1% QoQ). At 16.8%, IT services EBIT margins declined

80 bps QoQ, in line with our 16.8% expectation

Reported PAT of | 2,076.5 crore was above our | 2,008.6 crore

mainly on account of revenue beat

Wipro has guided that its Q2FY18E IT services revenues will be in the

range of $1,962-2,001 million, translating to subdued growth of -0.5-

1.5% QoQ growth

The company has approved a buyback of | 11,000 crore at | 320 per

share (18.9% premium to today’s closing price). It implies

acceptance ratio of 7.1%

Better-than-expected operating performance

Wipro reported a better-than-expected quarter performance with IT

services CC revenue up 0.3% QoQ, exceeding Wipro’s expectation for the

quarter (-2-0%). Among verticals, growth in reported terms was led by

energy & utilities (3.2% QoQ) and BFSI (4.1% QoQ). Geography-wise,

India and Middle East grew 6.7% sequentially witnessing early signs of

recovery from ongoing restructuring. The management is seeing strong

traction in BFSI and energy & utilities segment along with digital business

unit that now accounts for 22.5% of Q4 revenue vs. 17.5% in Q1FY17.

Expects industry leading growth by Q4FY18

Wipro has guided for its Q2FY18E IT services revenues to be in the range

of $1,962-2,001 million, translating to subdued growth of -0.5-1.5% QoQ.

While the continued headwind in HPS acquisition has been baked in Q2

guidance, softness in communication and healthcare vertical could pose a

challenge for revenue growth. The management is firm in its expectation

of reaching industry growth rates by Q4FY18. Going ahead, we expect IT

services US$ revenues to grow 5.8% in FY17-19E.

Margins in line; wage hike to impact margins in Q2FY18E

IT services EBIT margins came in at 16.8%, in line with our expectation.

The 80 bps decline QoQ was on account of weak revenue growth, lower

utilisation and one month wage hike impact. Margins are expected to get

impacted in Q2FY18E on the back of weaker revenue growth and two

month wage hike impact offset by operational efficiency. Overall, we

expect IT services EBIT margin to remain at 16.7%, 17.0% in FY18E,

FY19E, respectively.

Buyback & recent commentary to restrict downside; maintain HOLD

The announcement of a higher-than-expected buyback along with the

management commentary to match industry leading performance from

Q4FY18 should restrict the downside from the current level. We also

upgrade our EPS estimates by 5-6% to factor in the recent commentary

and buyback announcement. However, subdued guidance for Q2 and

challenges in its portfolio continue to remain at the forefront. Hence, we

anticipate Wipro’s earnings will be soft for the next few quarters with

rupee revenue CAGR of 4.7% in FY17-19E with average EBIT margins at

15.7%. We maintain our HOLD recommendation on the stock with a

revised target price of | 285/share (14x FY19E).

Rating matrix

Rating : Hold

Target : | 285

Target Period : 12 months

Potential Upside : 6%

What’s Changed?

Target Changed from | 250 to | 285

EPS FY18E Changed from | 17.1 to | 18.1

EPS FY19E Changed from | 19.1 to | 20.2

Rating Unchanged

* Adjusted for bonus issue

Quarterly Performance

Q1FY18 Q1FY17 YoY (%) Q4FY17 QoQ (%)

Revenue 13,626 13,698 (0.5) 14,062 (3.1)

EBIT 2,210 2,285 (3.3) 2,315 (4.5)

EBIT (%) 16.2 16.7 -46 bps 16.5 -24 bps

PAT 2,077 2,058 0.9 2,094 (0.8)

Key Financials

| Crore FY16 FY17 FY18E FY19E

Net Sales 51,244 55,040 55,110 60,356

EBITDA 11,171 11,458 10,435 11,718

Net Profit 8,886 8,490 8,166 9,103

EPS (|) 22.6 17.5 18.1 20.2

Valuation summary

FY16 FY17 FY18E FY19E

P/E 25.3 21.6 17.0 11.9

Target P/E 14.5 22.6 29.2 28.1

EV / EBITDA 8.5 6.9 5.3 4.3

P/BV 4.6 4.7 3.9 2.3

RoNW (%) 18.3 21.6 22.7 19.1

RoCE (%) 19.4 22.7 25.6 19.6

Stock data

Particular Amount

Market Capitalization (| Crore) 66,256.9

Total Debt (| Crore) 14,241.2

Cash and Investments (| Crore) 5,271.0

EV (| Crore) 45,049.4

52 week H/L 284 / 205

Equity capital 486.1

Face value | 2

Price performance (%)

1M 3M 6M 12M

TCS (0.3) 6.0 8.3 0.1

Infosys 2.9 5.6 (0.5) (10.2)

Wipro 5.9 8.0 11.1 (2.5)

HCL Tech 4.4 10.3 4.9 23.4

Research Analysts

Deepak Purswani, CFA

[email protected]

Deepti Tayal

[email protected]

Wipro Ltd (WIPRO) | 269

ICICI Securities Ltd | Retail Equity Research Page 2

Variance analysis

Q1FY18 Q1FY18E Q1FY17 YoY (%) Q4FY17 QoQ (%) Comments

Revenue 13,625.9 13,369.1 13,697.6 -0.5 14,062.1 -3.1

Decline was led by revenue decline in IT services (2.8% QoQ) and IT products

business (4.1% QoQ)

Employee expenses 9,215.8 9,025.7 9,172.5 0.5 9,499.2 -3.0

Gross Margin 4,410.1 4,343.4 4,525.1 -2.5 4,562.9 -3.3

Gross margin (%) 32.4 32.5 33.0 -67 bps 32.4 -8 bps

Selling & marketing costs 1,014.6 925.6 1,014.1 0.0 943.6 7.5

G&A expenses 726.4 730.1 759.9 -4.4 726.7 0.0

EBITDA 2,669.1 2,687.7 2,751.1 -3.0 2,892.6 -7.7

EBITDA Margin (%) 19.6 20.1 20.1 -50 bps 20.6 -98 bps

Depreciation 494.3 572.1 466.4 6.0 577.9 -14.5

EBIT 2,210.3 2,115.7 2,284.7 -3.3 2,314.7 -4.5 Margins declined led by one month wage hike and low utilisation

EBIT Margin (%) 16.2 15.8 16.7 -46 bps 16.5 -24 bps

Other income 472.6 493.0 386.4 22.3 458.3 3.1

PBT 2,682.9 2,608.6 2,671.1 0.4 2,773.0 -3.2

Tax paid 599.4 600.0 612.2 -2.1 674.2 -11.1

PAT 2,076.6 2,008.6 2,057.6 0.9 2,094.3 -0.8 PAT was above our estimates mainly on revenue beat

Key Metrics

Closing employee Count 166,790 166,000 158,272 5.4 165,481 0.8

TTM voluntary Attrition (%) 15.9 17.0 16.5 -60 bps 16.3 -40 bps

Utilisation ex trainees (%) 82.1 83.0 79.7 240 bps 84.8 -270 bps

Average $/| 65.7 65.7 66.9 -1.7 69.0 -4.8

Source: Company, ICICIdirect.com Research

Change in estimates

(| Crore) Old New % Change Old New % Change Comments

Revenue 55,164 55,110 -0.1 58,708 60,356 2.8

EBITDA 10,893 10,435 -4.2 11,769 11,718 -0.4

EBITDA Margin (%) 16.0 15.2 -81 bps 16.3 15.7 -63 bps

PAT 8,280 8,166 -1.4 9,273 9,103 -1.8

EPS (|) 17.1 18.1 6.0 19.1 20.2 5.7 Revised estimates owing to change in margin estimates

FY18E FY19E


Assumptions

Current Earlier Current Earlier

FY15 FY16 FY17 FY18E FY18E FY19E FY19E

Closing employee Count 158,217 172,912 181,482 191,482 191,482 203,482 201,482

TTM voluntary Attrition (%) 16.5 16.3 16.4 16.0 16.0 15.0 16.0

Utilisation ex trainees (%) 76.8 76.6 81.0 81.8 84.1 85.0 85.0

Average $/| 62.1 66.3 68.7 65.7 66.0 67.0 67.0 Tweaked estimates owing to rupee appreciation



Conference call highlights:

Management guidance: The management has guided IT services

revenue to be in the range of $1,962 million to $2,001 million for

Q2FY18E translating to -0.5-1.5% growth for the quarter. While the

continued headwind in HPS acquisition has been baked in Q2

guidance, the company expects the softness in communication and

healthcare vertical to continue in the near term. However, the

management is firm on its expectation of reaching industry growth

rates by Q4FY18

Margins: Reported IT services EBIT margins declined 80 bps to

16.8% in the quarter. Margins are expected to get impacted by two

month wage hike in the next quarter offset by operational efficiency

with levers as utilisation

Vertical outlook: The management sounded optimistic on the BFSI

and energy & utilities vertical. They anticipate the softness will

continue in the communication and healthcare vertical

Digital revenues: Digital revenues now account for 22.5% of total

services revenue vs. 17.5% in Q1FY17. With growing demand in

digital, the company continues to augment its workforce with digital

skills and has now reached 75,000+ technical employees trained on

digital

Bonus and buy-back: The company has completed the allotment of

bonus issue of 1:1. Wipro board have approved a proposal for

buyback of equity shares worth | 11,000 crore at | 320 per share

Employee details: The company’s closing employee count in IT

services was at 166,790 vs. 165,481 in the prior quarter with net

addition of 1,309. Voluntary TTM attrition rate declined 40 bps QoQ

to 15.9%. Utilisation (ex-trainees) declined sharply by 270 bps QoQ

to 82.1% from record new highs of 84.8% attained in Q4FY17

Local hiring in US: Wipro mentioned that locals now form over 50%

of US employees to offset the concerns on H-1B visa issues


Company Analysis

Operating highlights…

Among verticals, reported currency revenue growth was led by BFSI

(26.7% of revenue), which grew 4.1% QoQ and energy, natural resources

and utilities (13.4% of revenue), which grew 3.2% sequentially.

Communications (6.8% of revenue), healthcare & lifesciences (14.8% of

revenue) and manufacturing and technology (22.5% of revenue) declined

1.3%, 2.9% and 0.6% QoQ, respectively. The management is witnessing

strong traction in BFSI and E&U while remaining cautious on the

healthcare vertical owing to uncertain regulations in US. They expect

communication to remain soft in the near term.

Among geographies, quarterly growth was led by India & Middle East

business (10.4% of revenue), which grew 6.7% sequentially and

witnessed early signs of recovery from ongoing restructuring. Americas

(54.5% of revenue) grew 0.1% while APAC and other Emerging markets

(10.9% of revenue) grew 1.5% sequentially. Europe (24.2% of revenue)

witnessed decline of 0.1% QoQ on account of an engagement getting

completed in communication vertical. The management expects

restructuring of India-Middle East business to be complete by the end of

Q2FY18.

Among services, in reported terms, analytics (7.1% of revenue) grew

4.4% followed by application services (45.8%, 1.2%) and global

infrastructure services (28.1%, 1%). Product engineering services (7% of

revenue) declined 1.6% on the back of the same engagement completion

affecting Europe and communication vertical.

Exhibit 1: Dollar revenues may grow at 5.8% CAGR in FY17-19E vs. 7.1% during FY11-16

5221

5921

6218

6618

7082

1794

1931

1903

1955

7704

1971

7994

8621

1832

1838

1882

7345

1916

5.0

3.7 3.94.9

2.1

18.9

13.4

6.4 7.0

0.00.0

0.0

0.0

7.6

4.6 3.53.8

1000

3000

5000

7000

9000

11000

FY11

FY12

FY13

FY14

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

FY17

Q1FY18

FY18E

FY19E

$ m

illion

0

10

20

%

Dollar revenue Growth, YoY



Exhibit 2: Wipro vs. Nasscom guidance

-5.4

1.5

18.9

5.06.4 7.0

3.7 4.9 3.8

16.0

5.5

18.7

10.213.0 13.0 13.0

7.5

13.416.59.0

-10

0

10

20

30

40

50

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E

%Growth, YoY NASSCOM guidance


Clients contributing > $1 million grow to 624 vs. 565 in Q1FY17…

Clients contributing >$100 million remain unchanged at nine since

Q3FY17 while two clients transitioned to >$50 million category. The >$10

million bucket was flat at 163 while six clients were reduced in >$5

million. Furthermore, Wipro’s revenues from the top client (2.9% of

revenue) grew 0.8% QoQ after three quarters of its good growth.

Revenues from top 5 (10.3% of revenue) & top 10 (17.5% of revenue)

both witnessed growth of 3.9% and 4.4%, respectively. It was soft owing

to softness in top client as top 2-5 and top 6-10 accounts witnessed good

growth momentum. Active customer base was now at 1244 (vs. 1323 in

Q1FY17) with the addition of 45 new customers during the quarter.

Exhibit 3: Sequentially, clients contributing >$1 million in revenues increased by 59 YoY

429

475490 501

542 537 533 536 550 550565 571 576

602 602624

0

100

200

300

400

500

600

700

FY11

FY12

FY13

FY14

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

FY17

Q1FY18

x

$1 million+ clients


Margins in line…

IT services EBIT margins came in at 16.8% in line with our expectation.

The decline of 80 bps QoQ was on account of weak revenue growth,

lower utilisation and one month wage hike impact. Margins are expected

to get impacted in Q2FY18E on the back of weaker revenue growth and

two month wage hike impact offset by operational efficiency. Overall, we

anticipate IT services EBIT margin will remain at 16.7%, 17.0% in FY18E,

FY19E, respectively.


Exhibit 4: IT services margin come in at 16.8%

22.7

20.820.7

22.6

22.1

21.020.7

20.2 20.120.5

17.8 17.8

18.3

17.617.9

16.8 16.717.0

15

17

19

21

23

25

FY11

FY12

FY13

FY14

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

FY17

Q1FY18

FY18E

FY19E

%EBIT margin (IT services)

[


Net utilisation drop to 82.1% from peak levels of 84.8% in Q4…

Utilisation (ex-trainees) declined sharply by 270 bps QoQ to 82.1%. Gross

utilisation breaking its upward trajectory of the past six consecutive

quarters declined 110 bps sequentially. The decline in utilisation was one

of the reasons accountable for a drop in margins. At 15.9%, voluntary

attrition TTM declined 40 bps and still remains at elevated levels.

Exhibit 5: At 15.9%, attrition declines QoQ; continues to be at elevated levels…

22.7

17.5

13.7

15.1

16.5 16.4 16.4 16.3 16.1 16.3 16.5 16.6 16.3 16.3 16.415.9 16.0

15.0

10

13

16

19

22

25

FY11

FY12

FY13

FY14

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

FY17

Q1FY18

FY18E

FY19E

%

TTM voluntary Attrition


Exhibit 6: Utilisation drops to 80.3%…

77.0

75.4

73.2 73.0

76.8

79.4

77.2

73.8

76.176.6

78.8

80.2 80.0

81.9

81.0

80.3

81.8

85.0

70

73

76

79

82

85

FY11

FY12

FY13

FY14

FY15

Q1FY16

Q2FY16

Q3FY16

Q4FY16

FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

FY17

Q1FY18

FY18E

FY19E

%

Utilisation ex support (%)



Annual report key takeaways

Wipro chose “Be The New”, as the theme of the annual report,

and had set a goal to transform into a future focused company

that harnesses the power of digital and artificial intelligence (AI) to

serve its clients. In May 2017, Wipro introduced the new brand

identity of Wipro and rearticulated its values, the Spirit of Wipro.

With the growing demand for digital services, digital revenue now

makes up 22.1% of revenue in Q4FY17 from 17.5% in Q1FY17

Wipro’s venture capital arm, Wipro Ventures, has made four new

start-up investments in FY17 to bring its clients new technologies

that are reshaping the future of enterprises, especially in cyber

security, customer care automation, business process automation

and big data lifecycle management

In the last 18 months, the company has invested over US$1 billion

in acquisitions. In FY17, Wipro completed the acquisition of

Appirio, a leader in cloud application services. In April 2017, it

acquired Infoserver, a Brazilian technology service firm company

enhancing its footprint in Latin America

Wipro mentioned that immense progress in localisation in all key

markets was observed. In FY17, the company recruited over 3,000

locals in the US, leading to total workforce of 14,000 in US. Also,

Wipro witnessed good progress on localisation initiatives in the

UK, Singapore, Middle East and other parts of the world

Wipro has allotted 243 crore equity shares of | 2/- each as fully-

paid up bonus equity shares, in the ratio of 1:1 to eligible

members as on June 14, 2017, record date for this purpose

Operating cash flow registered growth of 17.6% YoY to | 9,277

crore primarily due to improved working capital management.

FCF grew 50% to | 3,952 crore owing to substantial payments

towards acquisitions. Subsequently, FCF/PAT grew to 46% from

29% in FY16


Outlook and valuation

Wipro reported better-than-expected dollar revenue growth while IT

service EBIT margins were in line with our estimates. However, it came

about with subdued revenues guidance of $1962-$2001 million (mn)

(implying growth of -0.5-1.5%) for Q2FY18E. Reported currency revenue

growth was led by energy & utilities (grew 3.2% QoQ), financial services

(grew 4.1% QoQ) among verticals. Geography-wise, India & Middle East

led growth (grew 6.7% QoQ) followed by APAC (grew 1.5% QoQ).

The announcement of a higher-than-expected buyback along with the

management commentary to match industry leading performance from

Q4FY18 should restrict the downside from the current level. We also

upgrade our EPS estimates by 5-6% to factor in the recent commentary

and buyback announcement. However, subdued guidance for Q2 and

challenges in its portfolio continue to remain at the forefront. Hence, we

anticipate Wipro’s earnings will be soft for next few quarters with rupee

revenue CAGR of 4.7% during FY17-19E with average EBIT margins at

15.7%. We maintain our HOLD recommendation on the stock with revised

price target of | 285/share (14x FY19E).

Exhibit 7: One year forward rolling PE

0

200

400

600

800

1000

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

|

Price 24 20 16 12 8


Exhibit 8: Valuation

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)

FY16 51,244 9.1 22.6 (35.7) 25.3 8.5 18.3 19.4

FY17 55,040 7.4 17.5 (22.7) 21.6 6.9 21.6 22.7

FY18E 55,110 0.1 18.1 3.8 17.0 5.3 22.7 25.6

FY19E 60,356 9.5 20.2 11.5 11.9 4.3 19.1 19.6



Recommendation History vs. Consensus

0

100

200

300

400

500

600

700

800

Jul-17May-17Feb-17Dec-16Sep-16Jul-16May-16Feb-16Dec-15Sep-15Jul-15

(|

)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

(%

)

Price Idirect target Consensus Target Mean % Consensus with BUY

Source: Bloomberg, Company, ICICIdirect.com Research

Key events

Date Event

Oct-15 Reports in line Q2FY16 quarter while guidance was okay. IT services $ revenues grew 2.1% QoQ to $1,831.9 million, inline our growth estimate

Jul-16 Greater Toronto Airports Authority Awards Futuristic IT and Business Transformation Contract to Wipro

Sep-16

Wipro wins a three-year IT contract from NSB Group, one of Norway’s largest transportation groups. This engagement reiterates Wipro’s continued focus and

investments in Norway and the Nordic region.

Sep-16 Wipro and Witbe enter into Global Partnership to Offer End-To-End Test Automation and Services Monitoring Deployment Solutions

Jan-17

Wipro announces retirement of TK Kurien effective from January 31, 2017. Mr Kurien served as Wipro CEO for five years before being elevated as Vice Chairman in

early 2016.

Jan-17 Wipro partners and Invests in Tradeshift to offer business process as a service (BPaaS) solution

Mar-17 Wipro completes sale of its EcoEnergy division on March 1,2017. Impact of the sale is expected to reflect in Q4FY17 financials.

Mar-17 Wipro wins a 12 year contract from NHS Scotland for next generation Enterprise master patient index (eMPI) solution

Apr-17

Government directs Wipro to develop a blueprint for enabling Aadhar-based biometric access for domestic flyers at all Airports across India. Wipro is expected to

report by early May and then airports would begin the process whereby a passenger's thumb is all the identification required to fly domestic routes

Apr-17

Wipro completes its acquisition of InfoServer, a Brazilian technology service firm and financials would start consolidating from Q1FY18. The deal size of the

acquisition was $8.7 million

Jun-17

Wipro increases its stake in IT consulting and software services firm Drivestream to 26.1% after exercising an optionally-convertible note for about US$809,690.

Established in 2001, Drivestream is a management and IT consulting firm specialised in Oracle cloud and ERP solutions.

Jun-17

Wipro collaborates with world's leading provider of open source solutions Red Hat to set up a cloud application factory. Using Red Hat OpenShift Container Platform,

Wipro could develop new cloud based applications without having to rewrite their legacy applications


Top 10 Shareholders Shareholding Pattern

Rank Name Latest Filing Date % O/S Position (m) Change (m)

1 Premji (Azim Hasham) 30-Jun-17 56.6% 2,741.0 0.0

2 Azim Premji Trust 30-Jun-17 16.5% 798.1 0.0

3 Life Insurance Corporation of India 30-Jun-17 3.0% 145.1 21.6

4 ICICI Prudential Asset Management Co. Ltd. 30-Jun-17 1.6% 77.6 0.0

5 Stewart Investors 31-May-17 1.3% 65.1 -0.7

6 BlackRock Institutional Trust Company, N.A. 30-Jun-17 0.9% 43.1 2.1

7 The Vanguard Group, Inc. 31-May-17 0.5% 25.0 0.0

8 APG Asset Management 31-Dec-15 0.4% 20.6 -2.9

9 Azim Premji Philanthropic Initiatives Pvt. Ltd. 30-Jun-17 0.4% 20.1 0.0

10 Norges Bank Investment Management (NBIM) 31-Dec-16 0.3% 15.3 2.3

(in %) Dec-16 Mar-17 Jun-17

Promoter 73.25 73.25 73.18

Public 26.18 26.19 26.26

Others 0.57 0.56 0.56

Total 100.00 100.00 100.00

Source: Reuters, ICICIdirect.com Research

Recent Activity

Investor name Value Shares Investor name Value Shares

Life Insurance Corporation of India 86.5m 21.6m Lyxor Asset Management -17.9m -4.3m

T. Rowe Price International (UK) Ltd. 20.9m 5.3m Unigestion -13.3m -3.2m

HDFC Asset Management Co., Ltd. 10.2m 2.6m Somerset Capital Management, L.L.P. -11.4m -2.9m

BlackRock Institutional Trust Company, N.A. 8.3m 2.1m UTI Asset Management Co. Ltd. -7.3m -1.9m

Grantham Mayo Van Otterloo & Co LLC 2.9m 0.8m Stewart Investors -3.0m -0.7m

Buys Sells

Source: Reuters, ICICIdirect.com Research


.

Financial summary

Profit and loss statement | Crore


Total Revenues 51,244 55,040 55,110 60,356

Growth (%) 9.1 7.4 0.1 9.5

COGS 35,672 39,154 39,357 42,897

Other Expenditure 4,787 5,214 5,065 5,487

EBITDA 11,171 11,458 10,435 11,718

Growth (%) 3.2 2.6 (8.9) 12.3

Depreciation 1,485 2,070 2,039 2,233

Other Income 2,338 2,166 2,819 2,946

Exchange difference 163 28 28 28

F.income (558) (518) (577) (577)

Pft. from associates - - - -

PBT 11,466 11,036 10,638 11,854

Growth (%) 2.7 (3.8) (3.6) 11.4

Tax 2,531 2,521 2,447 2,726

PAT before Minority int, 8,935 8,514 8,191 9,127

Minority int. 49 25 25 25

PAT 8,886 8,490 8,166 9,103

EPS 22.6 17.5 18.1 20.2

EPS (Growth %) (35.7) (22.7) 3.8 11.5


Cash flow statement | Crore


PAT before minority int. 8,941 8,514 8,191 9,127

Depreciation 1,497 2,311 2,039 2,233

(inc)/dec in Current Assets (1,212) 1,269 (1,338) (2,003)

(inc)/dec in current Liabilities 597 (815) (139) 2,783

Taxes paid (2,694) (2,548) (2,447) (2,726)

CF from operations 7,887 9,277 6,512 9,771

Other Investments (12,498) (10,014) 2,819 2,946

(Purchase)/Sale of Fixed Assets (1,317) (1,965) (2,088) (2,287)

CF from investing Activities (13,816) (11,628) 731 660

Inc / (Dec) in Equity Capital 0 - - -

Inc / (Dec) in sec.loan Funds 3,525 1,312 - -

Dividend & Divendend tax (3,684) (1,073) (1,636) (1,636)

CF from Financial Activities (159) (2,275) (12,636) (1,636)

Exchange rate differences 55 (141) - -

Opening cash balance 15,871 9,905 5,271 (122)

Closing cash 9,905 5,271 (122) 8,672


Balance sheet | Crore


Liabilities

Equity 494 486 417 417

Reserves & Surplus 46,023 51,544 47,720 55,763

Networth 46,517 52,030 48,137 56,181

Minority Interest 222 239 264 289

Debt - long term 1,736 1,961 1,961 1,961

Debt - short term 10,786 12,280 12,296 13,466

Deffered Tax Liability 511 661 661 661

Other liabilities & provisions 1,559 1,505 1,514 1,514

Source of funds 61,331 68,677 64,834 74,072

Assets

Goodwill 10,199 12,580 12,589 12,589

Intangible Assets 1,584 1,592 1,596 1,599

PPE 6,495 6,979 7,025 7,075

O.non current assets 3,213 3,201 3,201 3,200

Investments 491 710 710 710

Debtors 10,099 9,884 10,650 11,839

Cash & Cash equivalents 9,905 5,271 (122) 8,672

Investments - short term 20,979 30,178 30,178 30,178

O.current assets 9,437 8,957 9,529 10,342

Trade Payable 6,819 6,549 6,391 7,713

OCL & Provisions 4,251 4,126 4,129 4,420

Application of funds 61,331 68,677 64,834 74,072


Key ratios


Per share data (|)

EPS 22.6 17.5 18.1 20.2

BV 118.3 107.0 106.8 124.6

DPS 6.0 2.0 2.0 2.0

Operating Ratios

EBIT Margin 18.9 17.1 15.2 15.7

PAT Margin 17.3 15.4 14.8 15.1

Debtor days 72 66 71 72

Creditor days 49 43 42 47

Return Ratios (%)

RoE 19.1 16.3 17.0 16.2

RoCE 19.6 16.8 17.3 16.8

RoIC 56.9 53.8 44.2 48.8

Valuation Ratios (x)

P/E 11.9 15.4 14.8 13.3

EV / EBITDA 4.3 3.9 4.8 3.7

EV / Net Sales 0.9 0.8 0.9 0.7

Market Cap / Sales 1.3 1.2 1.2 1.1

Price to Book Value 2.3 2.5 2.5 2.2

Solvency Ratios

Debt/EBITDA 1.1 1.2 1.4 1.3

Debt / Equity 0.3 0.3 0.3 0.3

Current Ratio 1.8 1.8 1.9 1.8

Quick Ratio 1.8 1.8 1.9 1.8



ICICIdirect.com coverage universe (IT)

CMP M Cap EPS (|) P/E (x) RoCE (%) RoE(%)

(|) TP(|) Rating (| Cr) FY16 FY17P FY18E FY16 FY17P FY18E FY16 FY17P FY18E FY16 FY17P FY18E FY16 FY17P FY18E

Cyient (INFENT) 510 545 Hold 5,742 29.0 30.5 35.2 17.6 16.7 14.5 12.1 10.2 8.0 20.3 19.7 20.7 17.8 16.2 16.8

Eclerx (ECLSER) 1,290 1,145 Sell 5,318 87.9 88.4 79.5 14.7 14.6 16.2 9.8 9.9 10.2 42.6 35.4 31.2 33.5 29.5 23.9

Firstsource (FIRSOU) 39 45 Buy 2,582 3.8 4.1 4.4 10.2 9.4 8.9 7.7 6.7 6.0 11.7 12.1 12.1 12.9 11.5 11.0

HCL Tech (HCLTEC) 850 930 Buy 119,994 52.1 60.0 59.6 16.3 14.2 14.3 12.6 10.3 9.7 31.2 30.3 30.6 26.9 26.6 25.1

Infosys (INFTEC) 972 1,040 Hold 222,164 59.0 62.8 64.7 16.5 15.5 15.0 11.0 10.4 10.6 30.2 28.8 31.2 21.8 20.8 22.4

KPIT Tech (KPISYS) 128 140 Hold 2,547 14.1 10.6 11.0 9.1 12.0 11.6 5.4 7.0 6.6 23.7 16.3 16.3 20.4 15.4 12.8

Mindtree (MINCON) 507 470 Hold 8,514 32.9 24.9 26.9 15.4 20.4 18.8 9.9 11.0 11.5 29.1 21.2 24.2 22.9 16.2 18.8

NIIT Technologies (NIITEC) 496 520 Hold 1,777 45.8 43.2 45.3 10.8 10.5 11.0 2.9 2.5 2.2 30.5 29.9 28.1 17.6 14.9 14.1

Persistent (PSYS) 580 700 Buy 4,639 37.2 37.6 40.7 15.6 15.4 14.5 9.7 8.5 7.1 23.8 21.3 20.4 18.1 16.2 15.4

TCS (TCS) 2,399 2,400 Hold 469,892 122.9 133.4 133.1 19.5 18.0 18.0 14.4 13.1 13.1 42.2 38.0 37.6 33.1 29.8 29.5

Tech Mahindra (TECMAH) 429 490 Buy 42,158 31.7 31.8 33.9 13.5 13.5 12.7 8.8 8.7 7.8 25.5 21.9 20.6 21.7 17.2 16.2

Wipro (WIPRO) 269 285 Hold 66,257 22.6 17.5 18.1 11.9 15.4 14.8 4.3 3.9 4.8 19.6 16.8 17.3 19.1 16.3 17.0

Sector / Company

EV/EBITDA (x)



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Wipro Ltd (WIPRO) | 269content.icicidirect.com/mailimages/IDirect_Wipro_Q1FY18.pdf · infrastructure services (28.1%, 1%). Product engineering services (7% of revenue) declined 1.6%