Download - Wipro (WPRO IN)
April 16, 2021 1
Rating: BUY | CMP: Rs431 | TP: Rs500
Success of turnaround visible…
Quick Pointers:
Reported revenue, margins & guidance way ahead than consensus estimates.
Strongest ever 1Q guidance of 2-4% QoQ CC revenue growth. Highest ever
deal win TCV of 7.2$ Bn, +33% YoY in 1HFY21.
We have increased our EPS estimates by 7%/5% for FY22/23 led by i) increase
in organic revenue growth assumption (12% growth for FY22E), ii) Increase in
EBIT margins assumption for FY22/23.
Wipro’s 4QFY21 performance was beat on all counts – i) revenue grew at 3.9%
QoQ USD (Ple: 3.5%, Cons: 3.5%) ii) EBIT margin of 21%, 100bps beat on our
estimates (Ple: 20%, Cons: 20.5%) iii) strongest ever guidance of 2-4% QoQ
CC revenue growth (vs our estimates of 1-3% QoQ CC) and iv) Strong 2HFY21
order book of $7.2 Bn, +33% YoY. Wipro’s growth trajectory has improved
since last 3 quarters & strong organic guidance of 2-4% QoQ (Ple:1-3%, Cons:
0-2.5%) shows sustainability. Not just on revenue, we have seen sustained
strong large deal momentum also USD 1.4 bn in Q4 (vs. USD 1.2 bn in Q3).
We are clearly witnessing new management focus & aggression towards
growth.
IT services margin is at six year high levels. Q4FY21 margin declined by ~70
bps QoQ to 21.0% due to full impact of wage hike for ~80% of employees,
partly offset by operational efficiencies, offshoring is at all-time high and
utilization. There are some near term headwinds to margins- 1) Roll-out hike
for top 20% employees effective June 1, 2) Skill based bonus for employees,
3) Capco integration to impact margins by a~200 bps in FY22 due to non-cash
charges & incentive plans. We believe that margins will comfortably stabilize
~19% (avg) for FY22/23 as there is strong tailwind from growth, shift to
offshoring, optimization of pyramid.
Wipro’s turnaround effort under leadership on new CEO is on right track. The
organization restructuring, new leadership and strengthened sales team are
in place to tap extremely strong demand momentum. However, ability to
successfully integrate the BFSI consulting firm Capco will be a key thing to
watch out for in coming quarters.
At the same time factors such as i) highest ever deal win TCV in last two
quarters, ii) management’s confidence of further increasing large deal
momentum and iii) strong guidance gives us confidence that the new
management’s strategic initiatives would drive stronger growth for FY22.
We forecast 17%/14% revenue growth for Wipro for FY22/23E & expect
margins at 18.4%/18.3% for FY22/23. We value Wipro on FY-23 earnings of
21X (29%/43% discount to Infy/TCS resp.) to arrive at changed TP of INR 500
(earlier: INR476). Wipro is currently trading at 19.9X/17.2X for FY22/23E
earnings of INR 21.7/25.0 respectively with EPS CAGR of 17.2% for FY21-23
respectively. Maintain Buy.
Wipro (WPRO IN)
April 16, 2021
Q4FY21 Result Update
☑ Change in Estimates | ☑ Target | Reco
Change in Estimates
Current Previous
FY22E FY23E FY22E FY23E
Rating BUY BUY
Target Price 500 476
Sales (Rs. m) 7,31,465 8,44,037 7,31,276 8,14,355
% Chng. - 3.6
EBITDA (Rs. m)1,83,266 2,10,586 1,71,984 2,01,109
% Chng. 6.6 4.7
EPS (Rs.) 21.7 25.0 20.2 23.8
% Chng. 7.2 5.1
Key Financials - Standalone
Y/e Mar FY20 FY21 FY22E FY23E
Sales (Rs. bn) 610 619 731 844
EBITDA (Rs. bn) 123 149 183 211
Margin (%) 20.2 24.0 25.1 24.9
PAT (Rs. bn) 95 108 123 142
EPS (Rs.) 15.8 18.2 21.7 25.0
Gr. (%) 0.8 14.8 19.2 15.3
DPS (Rs.) 0.9 1.0 2.9 2.9
Yield (%) 0.2 0.2 0.7 0.7
RoE (%) 16.9 19.4 20.4 19.8
RoCE (%) 15.6 18.9 19.6 19.5
EV/Sales (x) 3.8 3.7 2.9 2.4
EV/EBITDA (x) 18.9 15.4 11.5 9.5
PE (x) 27.2 23.7 19.9 17.2
P/BV (x) 4.6 4.6 3.7 3.1
Key Data WIPR.BO | WPRO IN
52-W High / Low Rs.505 / Rs.174
Sensex / Nifty 48,804 / 14,581
Market Cap Rs.2,360bn/ $ 31,496m
Shares Outstanding 5,479m
3M Avg. Daily Value Rs.12772.48m
Shareholding Pattern (%)
Promoter’s 74.37
Foreign 8.46
Domestic Institution 6.08
Public & Others 11.09
Promoter Pledge (Rs bn) -
Stock Performance (%)
1M 6M 12M
Absolute 1.0 26.1 130.9
Relative 5.1 5.4 45.2
Aniket Pande
[email protected] | 91-22-66322300
Aditi Patil
Wipro
April 16, 2021 2
Best 4Q revenue growth in a decade: Wipro’s revenue grew at strong rate of
3.9% QoQ USD (Ple: 3.5%, Cons: 3.5%), above our and consensus estimates
led by surge in volumes. Revenue growth was 3% QoQ in CC terms, in-line
with our estimates, implying benefit from USD depreciation against EUR &
GBP. For the full year revenue came at $8.14 Bn, -1.4% YoY USD, -2.3% YoY
CC.
Management mentioned that they are seeing significant traction across all
markets – Americas 1 grew by 3.2% QoQ USD and Americas 2 grew by 4.5%
QoQ USD. Growth in Europe +5.6% QoQ $ was led by strong performance in
UK, Ireland & Germany. Growth in APMEA was low at 0.9% QoQ $ because
of their conscious exit from low quality margin dilutive business. Sequential
revenue growth was led by growth led by strong recovery in Consumer BU
(+7.7% QoQ USD) and E&U +4.8% QoQ USD and strong demand momentum
in BFSI (+3.8% QoQ USD), & Technology +10.2% QoQ USD.
Highest ever order book: Wipro won large deal TCV of $1.4 Bn in 4QFY21
and highest ever total deal TCV of 7.1$ Bn in 2HFY21, +33% YoY. Wipro won
two large multi-multi-million dollar deals this quarter – i) US-based industrial
manufacturing company and ii) US-based digital transformation and consulting
agency apart from the two announced earlier in the quarter (Telefonica & Fiat
Chrysler. The new mega deal and large deal with Telefonica Germany aided
the 16.7% increase in large deal TCV to US$1.4 bn. Wipro announced a mega
deal win in its US consumer business in 4QFY21. TCV of the deal has the
potential to reach US$1 bn.
We believe that Wipro can further improve its volume of large deals given
strong demand environment, increased client focus with pro-active hunting and
mining of deals, and improved execution rigour under leadership of new CEO.
iDEAS service vertical grew at 2.1% QoQ USD driven by demand for digital,
data & engineering. iCORE grew by 4.3% QoQ USD led by digital operations,
cloud infrastructure services and cybersecurity. Management mentioned that
cloud contributes to 1/4th of revenues and is growing several times higher
than overall revenues. They also see double digit growth in cyber
security and digital CX.
Strong growth in top 10 clients (+7% QoQ) reflects success of highly focused
sales team in mining large clients. Wipro continues to invest in industry experts
and strengthens sales team with addition of 530 sales personnel in 4Q
Management mentioned that they have received very positive response from
Global Key Account executives.
Beat in operating margin: EBIT margins surprised us at 21% (-60 bps QoQ
and + 340 bps YoY) vs our estimates of 20.0% & cons: 20.2%. Impact of wage
hike rollout from Jan 1 2021 was largely offset by higher offshore mix and stable
utilization (excl. trainees) (86.0% in 4Q vs 86.3% in 4Q), stable sub-contracting
costs. We anticipate margins for FY22 and FY23 to be lower by ~200-250 bps
due to impact of wage hikes and Capco acquisitions charges.
We delivered a third consistent
quarter of strong revenue growth,
deal wins and operating margins.
Wipro
April 16, 2021 3
Strategy to manage supply side pressures: Attrition inched up by +110 bps
QoQ to 12.1% given strong demand for digitally skilled talent. Wipro added
7404 employees in 4QFY21 and hiring momentum will continue at strong pace
to ease out supply side pressures. Wipro had rolled out wage hikes and
promotions to 80% of their staff (junior) from Jan 1 2021 and for the rest 20%
(senior management) they will roll-out from 1st April. Management mentioned
that salary hikes and bonuses were aggressive as compared to industry and
were based on performance and criticality of the skillset. For FY22 they will roll-
out hikes in June 2021. Wipro will handle supply side issues through
aggressive hiring and wage hike practices on-par or higher than industry.
Strongest guidance: Management expects revenue from IT Services
business to be in the range of $2,195 million to $2,238 million. This translates
to a sequential growth of 2.0% to 4.0% QoQ. This does not include revenue
from recently announced acquisitions of Capco and Ampion. Large component
of Metro AG deal will ramp up in 1QFY21. Capco and Ampion acquisitions are
expected to be completed in June 2021. Wipro and Capco have started jointly
interacting with clients and are seeing strong traction in BFSI consulting plus
large digital transformation. The strong guidance is from 1.5% contribution from
Metro AG deal, ~0.5% contribution from Telefonica deal and potential revenue
growth contribution from new mega-deal signed in March 2021 quarter.
Strong cash flow management: DSO improved by 8 days YoY. For FY21,
OCF was at ₹147.6 billion, an increase of 46.6% YoY, which is 136.7% of Net
Income. FCF/PAT was also healthy at 119%. Cash on book declined to $3.6
Bn because of $95 Bn spent on Buyback concluded in Jan 2021. Total dividend
for FY21 amounts to of INR 1.
New leadership team to drive in more client focus: Wipro has on-boarded
several external hires in senior management positions in recent month. Wipro
has hired quite a few leaders for roles of country/geo heads to complement
shift to a geography-based operating model. P&L ownership, driving growth
through account mining and large deals are key mandates for new hires. Most
of the new leaders are experienced personnel from global Tier-1 organizations.
Strong bounce back from 2Q onwards in FY21: After sharp declined in
1QFY21, Wipro posted three consecutive quarter of strong revenue growth
resulting in lower decline in FY21 revenue, -1.4% YoY. EBIT margin also
expanded 280 bps YoY to 19.9% in FY21 led by improved operating metrics
and execution focus. Net Income for the year was INR 107.9 billion, an increase
of 11.0% YoY. EPS for the year was at INR 19.11, an increase of 14.6% YoY
led by revenue growth, margin expansion and lower ETR.
Wipro has won a multi-million-dollar
integrated engagement from a
leading US-based industrial
manufacturing company to transform
and modernize its business functions
and enable it to become a digital
enterprise via transformation in
applications, infrastructure, cyber
security and service delivery.
Cloud demand and adjacencies
created as result of migration to cloud
will sustain strong deal momentum in
cloud for long term.
Wipro
April 16, 2021 4
Q4FY21: Quick View on Results
IFRS Consolidated (RS m) 4Q21 3Q21 QoQ 4Q20 YoY Ple % var from
est
IT Revenue (US$ m) 2,152 2,071 3.9% 2,074 3.8% 2,142 0.5%
Consolidated Sales 1,62,454 1,56,700 3.7% 1,57,110 3.4% 1,59,054 2.1%
EBITDA 41,258 41,174 0.2% 31,996.0 28.9% 39,493 4.5%
EBITDA Margin (%) 25.4% 26.3% -88 bps 20.4% 503 bps 24.8% 57 bps
EBIT 34,167 33,813 1.0% 25,887 32.0%
EBIT Margin (%) 21.0% 21.6% -55 bps 16.5% 455 bps 20.0% 103 bps
PBT 37,496 38,489 -2.6% 29,216 28.3% 36,465 2.8%
Tax 7,755 8,524 -9.0% 7,755 0.0% 7,720 0.5%
PAT 29,721 29,667 0.2% 21,270 39.7% 28,684 3.6%
EPS (Rs) 5.4 5.2 4.1% 3.7 44.3% 5.00 7.7%
Source: Company, PL
Key external hires under new CEO
Period Name Designation Previous Role
Apr - 21 Suzzane Dann Senior Vice president and Sector head for Capital markets & Insurance, North America
Corporate vice President and GM at Avande (Accenture & Microsoft JV)
Apr - 21 Sarah Adam Gedge MD – Australia and New Zealand
Worked in project and service-based consultancies for more than 25 years across ANZ, APMEA and LATM
Mar - 21 Subha Tatavarti CTO Lead Walmart’s product and technology transformation
Mar-21 Philippe Dintrans Head, Domain & consulting, iDEAS Global consulting leader, BFS, Cognizant
Feb-21 Stephanie Trautman Chief Growth Officer MD, Global Strategic Account Lead, NE Leadership Team, Accenture
Feb-21 Pierre Bruno CEO, Europe VP & MD, South Europe, DXC
Feb-21 Graziella Neuvéglise Regional head, MD, Southern Europe VP, Manufacturing, France, CGI
Feb-21 Tomoaki Takeuchi MD, Head, Japan President, Cognizant Japan
Feb-21 René Mulder MD, Head, Switzerland MD, Chairman, DXC Technology Switzerland
Jan-21 Douglas Silva MD, Head, Brazil Sales Director, Brazil, AWS
Dec-20 Tony Buffomante SVP, Head, Cybersecurity & Risk services Principal, Head, US, Cyber Security Services, KPMG
Nov-20 Michael Seiger MD, Head, Germany and Austria Global head, Application management, Atos
Source: Company, PL
Wipro
April 16, 2021 5
Valuation
We forecast 17%/14% revenue growth for Wipro for FY22/23E & expect margins at
18.4%/18.3% for FY22/23. We value Wipro on FY-23 earnings of 21X (29%/43%
discount to Infy/TCS resp.) to arrive at changed TP of INR 500 (earlier: INR476).
Wipro is currently trading at 19.9X/17.2X for FY22/23E earnings of INR 21.7/25.0
respectively with EPS CAGR of 17.2% for FY21-23 respectively. Maintain Buy.
Change in Estimates
Year to 31-Mar FY21E FY22E FY23E
IT Services revenue (US$ m)
- New 8,313 9,752 11,108
- Old 8,273 9,749 10,718
Change 0.5% 0.0% 3.6%
USD Revenue growth 0.7% 17.3% 13.9%
EBIT Margins
- New 19.9% 18.6% 18.5%
- Old 19.6% 17.1% 18.0%
Change 27 bps 154 bps 49 bps
EPS - Fully diluted (Rs)
- New 18.2 21.7 25.0
- Old 18.0 20.2 23.8
Change 1.0% 7.2% 5.1%
Source: PL
WIPRO One year forward P/E valuation chart
17.38
23.3
6.0
8.5
11.0
13.5
16.0
18.5
21.0
23.5
26.0
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P/E Mean Mean + Std Dev Mean - Std Dev
Source: Company, PL
Wipro
April 16, 2021 6
Revenue growth
3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21
Strategic Business Units $ QoQ growth
BFSI 4.8% 1.7% -1.5% -0.5% 0.9% -2.6% -6.4% 5.4% 1.6% 3.9%
Communications 1.8% -0.3% 1.7% -2.9% 2.2% -1.0% -17.1% 7.8% 2.0% -0.1%
Consumer Business Unit 1.2% 5.3% -5.4% 3.1% 8.0% -1.6% -12.3% 5.6% 5.2% 7.7%
Energy, Natural Resources and Utilities 3.4% -0.1% -1.8% 1.3% 2.2% -1.8% -4.4% 1.3% 5.6% 4.7%
Health Business Unit 2.6% 2.2% -1.8% -1.0% 3.0% 2.0% -7.3% 5.2% 5.5% -2.8%
Manufacturing & Technology -1.9% -1.0% -0.3% 1.5% -0.7% 1.4% -4.7% -0.6% 4.9% 5.9%
Strategic Business Units $ YoY growth
BFSI
Communications 15.1% 12.8% 8.7% 4.6% 0.7% -3.6% -8.4% -3.1% -2.4% 4.1%
Consumer Business Unit -7.4% -0.7% 6.1% 0.2% 0.6% -0.1% -18.5% -9.6% -9.8% -9.0%
Energy, Natural Resources and Utilities 1.1% 11.0% 4.5% 3.9% 10.9% 3.6% -3.9% -1.5% -4.1% 5.0%
Health Business Unit 8.7% 3.6% 3.3% 2.8% 1.6% -0.1% -2.8% -2.8% 0.4% 7.0%
Manufacturing & Technology 9.6% -4.4% -0.5% 2.0% 2.4% 2.2% -3.6% 2.5% 4.9% 0.0%
-3.6% -9.9% -4.8% -1.8% -0.6% 1.9% -2.6% -4.6% 0.8% 5.3%
Strategic Business Units CC QoQ growth
Communications
Consumer Business Unit 5.3% 1.3% -0.6% -2.4% 1.5% -0.2% -16.2% 4.6% 0.7% -0.4%
Energy, Natural Resources and Utilities 2.1% -1.2% 2.8% 4.1% 7.0% -0.1% -12.4% 4.5% 5.2% 6.9%
BFSI 1.4% 5.3% -4.4% 2.3% 1.2% 1.3% -5.4% -2.4% 4.1% 2.7%
Health Business Unit 4.6% -0.7% 0.2% -0.1% 0.4% -0.9% -6.4% 3.7% 1.2% 2.7%
Manufacturing & Technology 2.8% 2.1% -1.5% -0.6% 3.4% 2.3% -7.2% 4.1% 5.0% -2.9%
Technology 0.4% -0.7% -2.0% 3.3% 4.4% -1.3% -8.1% 3.5% 4.0% -1.1%
-4.2% -2.0% 2.7% 1.3% -3.7% 3.2% -2.1% -4.7% 4.5% 9.9%
Strategic Business Units CC YoY growth
Communications
Consumer Business Unit 17.5% 15.9% 11.2% 2.4% 1.3% 2.0% -16.9% -10.3% -11.4% -11.4%
Energy, Natural Resources and Utilities -3.2% 3.2% 8.8% 6.1% 12.1% 6.4% -2.5% -2.1% -3.6% 2.9%
BFSI 10.0% 14.8% 7.7% 6.3% 2.6% 4.9% -1.7% -5.4% -2.6% 0.1%
Health Business Unit 9.8% 9.4% 7.8% 5.9% 1.0% -1.3% -6.9% -3.3% -2.5% 0.6%
Manufacturing & Technology -4.1% -2.3% 0.4% 3.0% 4.2% 3.6% -2.1% 2.3% 3.7% -1.6%
Technology -0.2% -3.2% -0.1% 0.9% 4.9% 4.2% -2.0% -1.5% -2.4% -2.8%
Source: Company, PL
Strong Revenue Performance
0.3%1.1%
0.1%
2.4% 1.1%
1.8%
-7.5%
3.40%
3.00%
2.8%
2.9%
2.4%
5.1%
3.8%
3.8%
-4.4%
-3.40%-2.00%
0.50%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
CC revenue growth QoQ CC revenue growth YoY
Source: Company, PL
Wipro
April 16, 2021 7
Tight cost management supported margins
16
.1%
15
.8%
16.4
%
14
.3% 1
6.0
%
16
.8%
14.4
%
13.7
%
14
.3%
13
.2%
18
.4%
17
.0%
16
.2%
17
.3%
17.1
%
15
.9% 17
.2% 18
.5%
21.2
%
20.5
%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
EBIT Margins
Source: Company, PL
Strong demand momentum in BFSI
514
543
558
579
593
613
643
654
644
641
647
630
590
622
632
656
1.2%
5.7%2.7%
3.8%
2.3%
3.4%4.8%1.7%
-1.5%-0.5%
0.9%
-2.6%
-6.4%
5.4%
1.6%
3.9%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
400
450
500
550
600
650
700
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
BFSI (USD mn) BFSI Growth QoQ
Source: Company, PL
Strong recovery in CBU in 4QFY21
305 313 316 303 304 315 319336
318 328354 348
306323
340366
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0
50
100
150
200
250
300
350
400
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
3Q
20
4Q
20
1Q
21
2Q
21
3Q
21
4Q
21
Revenues from Consumer BU (USD Mn) Growth YoY (%)
Source: Company, PL
Wipro
April 16, 2021 8
Vertical-wise Revenues
(US$ m) 4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
Communications 107.6 107.7 -0.1% 118.2 -9.0%
BFSI 656.5 631.7 3.9% 630.4 4.1%
Manufacturing & Tech 458.5 432.8 5.9% 435.5 5.3%
Healthcare and Life Sciences 279.8 287.9 -2.8% 279.9 0.0%
Consumer 365.9 339.6 7.7% 348.4 5.0%
Energy & Utilities 284.1 271.3 4.7% 265.4 7.0%
% of Total
Communications 5.0% 5.2% -20 bps 5.7% -70 bps
BFSI 30.5% 30.5% 0 bps 30.4% 10 bps
Manufacturing & Tech 21.3% 20.9% 40 bps 21.0% 30 bps
Healthcare and Life Sciences 13.0% 13.9% -90 bps 13.5% -50 bps
Consumer 17.0% 16.4% 60 bps 16.8% 20 bps
Energy & Utilities 13.2% 13.1% 10 bps 12.8% 40 bps
Source: Company, PL
Market-wise revenue mix
(US$ m) 4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
Americas 1 628.5 608.9 3.2% 624.2 0.7%
Americas 2 630.7 602.7 4.6% 613.8 2.7%
Europe 611.3 579.9 5.4% 557.8 9.6%
APMEA 282.0 279.6 0.9% 277.9 1.5%
% of Total
Americas 1 29.2% 29.4% -20 bps 30.1% -90 bps
Americas 2 29.3% 29.1% 20 bps 29.6% -30 bps
Europe 28.4% 28.0% 40 bps 26.9% 150 bps
APMEA 13.1% 13.50% -40 bps 13.40% -30 bps
Source: Company, PL
Service wise revenues
(US$ m) 4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
iDEAS 1222.6 1186.7 3.0% 1211.0 1.0%
iCORE 929.8 884.3 5.1% 862.7 7.8%
% of Total
iDEAS 56.8% 57.3% -50 bps 58.4% -160 bps
iCORE 43.2% 42.7% 50 bps 41.6% 160 bps
Source: Company, PL
Wipro
April 16, 2021 9
Client Metrics
4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
Total >1$mn 566 567 -1 574 -8
US$1m - US$3m 217 226 -9 233 -16
US$3m - US$5m 92 81 11 81 11
US$5m - US$10m 90 92 -2 94 -4
US$10m - US$20m 74 71 3 70 4
US$20m - US$50m 53 59 -6 56 -3
> US$50m 40 38 2 40 0
> US$100m 11 10 1 15 -4
Source: Company, PL
Revenues from Top clients
4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
Revenue from new Customers 77.5 53.8 43.9% 62.2 24.6%
Revenue from repeat businesses 2,075 2,017 2.9% 2,011 3.2%
Number of new customers 52 89 -37 65 -13
Total Number of active customers 1,120 1,136 -1.4% 1,074 4.3%
Customer Concentration
Top Customer 66.7 64.2 3.9% 62.2 7.3%
Top 2-5 Clients 195.9 182.2 7.5% 190.8 2.7%
Top 5 262.6 246.4 6.6% 253.0 3.8%
Top 6-10 157.1 145.0 8.4% 147.2 6.7%
Top 10 419.7 391.4 7.2% 400.2 4.9%
Non Top 10 customers 1,732.7 1,679.6 3.2% 1,673.5 3.5%
Revenue from new Customers (%) 3.6% 2.6% 100 bps 3.0% 20.0%
Customer Concentration
Top Customer 3.1% 3.1% 0 bps 3.0% 10 bps
Top 5 12.2% 11.9% 30 bps 12.2% 0 bps
Top 10 19.5% 18.9% 60 bps 19.3% 20 bps
Source: Company, PL
Headcount Metrics
4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
Closing HC 1,97,712 1,90,308 7404 1,82,886 14,826
Gross Utilization 76.7% 74.8% 190 bps 73.4% 330 bps
Net Utilization (Excl Training) 86.0% 86.3% -30 bps 82.6% 340 bps
Attrition
IT Services excl BPO and I&ME
Voluntary TTM 12.1% 11.0% 110 bps 14.7% -260 bps
Sales & Support Staff (IT Services) (avg) 15,368 14,838 530 14,908 460
Source: Company, PL
Revenue contribution
4Q21 3Q21 QoQ gr. 4Q20 YoY gr.
Revenue from FPP 63.0% 63.2% -20 bps 63.2% -20 bps
Onsite Revenue 45.5% 47.3% -180 bps 51.8% -630 bps
Offshore Revenue 54.5% 52.7% 180 bps 48.2% 630 bps
Source: Company, PL
Wipro
April 16, 2021 10
Financials
Income Statement (Rs m)
Y/e Mar FY20 FY21 FY22E FY23E
Net Revenues 6,10,232 6,19,430 7,31,465 8,44,037
YoY gr. (%) 4.2 1.5 18.1 15.4
Employee Cost 4,14,028 3,94,567 4,45,563 5,32,875
Gross Profit 1,96,204 2,24,863 2,85,902 3,11,162
Margin (%) 32.2 36.3 39.1 36.9
SG&A Expenses - - - -
Other Expenses - - - -
EBITDA 1,23,474 1,48,777 1,83,266 2,10,586
YoY gr. (%) 10.4 20.5 23.2 14.9
Margin (%) 20.2 24.0 25.1 24.9
Depreciation and Amortization 22,057 28,638 48,908 56,408
EBIT 1,01,417 1,20,139 1,34,358 1,54,178
Margin (%) 16.6 19.4 18.4 18.3
Net Interest - - - -
Other Income 20,635 18,843 21,848 25,848
Profit Before Tax 1,22,052 1,38,982 1,56,206 1,80,026
Margin (%) 20.0 22.4 21.4 21.3
Total Tax 26,349 30,345 32,662 37,570
Effective tax rate (%) 21.6 21.8 20.9 20.9
Profit after tax 95,703 1,08,637 1,23,544 1,42,456
Minority interest 495 716 240 240
Share Profit from Associate - - - -
Adjusted PAT 95,208 1,07,921 1,23,304 1,42,216
YoY gr. (%) 0.9 13.4 14.3 15.3
Margin (%) 15.6 17.4 16.9 16.8
Extra Ord. Income / (Exp) - - - -
Reported PAT 95,208 1,07,921 1,23,304 1,42,216
YoY gr. (%) 0.9 13.4 14.3 15.3
Margin (%) 15.6 17.4 16.9 16.8
Other Comprehensive Income - - - -
Total Comprehensive Income 95,208 1,07,921 1,23,304 1,42,216
Equity Shares O/s (m) 6,011 5,936 5,692 5,693
EPS (Rs) 15.8 18.2 21.7 25.0
Source: Company Data, PL Research
Balance Sheet Abstract (Rs m)
Y/e Mar FY20 FY21 FY22E FY23E
Non-Current Assets
Gross Block 2,28,494 2,37,404 2,50,119 2,62,242
Tangibles 81,120 85,192 97,907 1,10,030
Intangibles 1,47,374 1,52,212 1,52,212 1,52,212
Acc: Dep / Amortization - - - -
Tangibles - - - -
Intangibles - - - -
Net fixed assets 2,28,494 2,37,404 2,50,119 2,62,242
Tangibles 81,120 85,192 97,907 1,10,030
Intangibles 1,47,374 1,52,212 1,52,212 1,52,212
Capital Work In Progress - - - -
Goodwill - - - -
Non-Current Investments 16,748 16,420 16,420 16,420
Net Deferred tax assets - - - -
Other Non-Current Assets 51,969 54,424 54,424 54,424
Current Assets
Investments 1,89,635 1,75,707 1,75,707 1,75,707
Inventories 1,865 1,064 1,256 1,450
Trade receivables 1,04,474 94,298 1,11,354 1,28,491
Cash & Bank Balance 1,44,499 1,69,793 2,47,293 3,44,267
Other Current Assets 61,235 82,324 96,034 1,09,809
Total Assets 7,98,919 8,31,434 9,52,607 10,92,810
Equity
Equity Share Capital 2,930 2,930 2,930 2,930
Other Equity 5,54,348 5,50,165 6,54,541 7,77,829
Total Networth 5,57,278 5,53,095 6,57,471 7,80,759
Non-Current Liabilities
Long Term borrowings 4,840 7,458 7,458 7,458
Provisions - - - -
Other non current liabilities 36,496 39,343 39,343 39,343
Current Liabilities
ST Debt / Current of LT Debt 73,202 75,874 67,874 59,874
Trade payables 78,129 78,870 93,135 1,07,468
Other current liabilities 65,062 75,296 85,588 95,929
Total Equity & Liabilities 8,16,882 8,31,434 9,52,607 10,92,810
Source: Company Data, PL Research
Wipro
April 16, 2021 11
Cash Flow (Rs m)
Y/e Mar FY20 FY21 FY22E FY23E Year
PBT 1,22,052 1,38,982 1,56,206 1,80,026
Add. Depreciation 22,057 28,638 48,908 56,408
Add. Interest (17,573) (15,848) (19,848) (23,848)
Less Financial Other Income 20,635 18,843 21,848 25,848
Add. Other - - - -
Op. profit before WC changes 1,26,536 1,51,772 1,85,266 2,12,586
Net Changes-WC 34,498 1,255 (6,401) (6,431)
Direct tax (26,349) (30,345) (32,662) (37,570)
Net cash from Op. activities 1,34,685 1,22,682 1,46,204 1,68,585
Capital expenditures (49,208) (37,548) (61,623) (68,530)
Interest / Dividend Income - - - -
Others 14,333 14,256 - -
Net Cash from Invt. activities (34,875) (23,292) (61,623) (68,530)
Issue of share cap. / premium - - - -
Debt changes (21,425) 5,290 (8,000) (8,000)
Dividend paid (6,517) (6,523) (18,928) (18,928)
Interest paid 17,573 15,848 19,848 23,848
Others (1,257) (1,093) - -
Net cash from Fin. activities (11,626) 13,522 (7,080) (3,080)
Net change in cash 88,184 1,12,912 77,500 96,974
Free Cash Flow 85,477 85,134 84,580 1,00,054
Source: Company Data, PL Research
Quarterly Financials (Rs m)
Y/e Mar Q1FY21 Q2FY21 Q3FY21 Q4FY21
Net Revenue 1,49,131 1,51,145 1,56,700 1,62,454
YoY gr. (%) 1.3 (0.1) 1.3 3.4
Raw Material Expenses 97,546 98,807 96,386 1,01,828
Gross Profit 51,585 52,338 60,314 60,626
Margin (%) 34.6 34.6 38.5 37.3
EBITDA 31,790 34,555 41,174 41,258
YoY gr. (%) 10.5 11.8 29.5 28.9
Margin (%) 21.3 22.9 26.3 25.4
Depreciation / Depletion 6,154 6,580 7,927 7,977
EBIT 26,841 28,313 33,813 34,167
Margin (%) 18.0 18.7 21.6 21.0
Net Interest - - - -
Other Income 5,284 4,102 5,242 4,215
Profit before Tax 30,951 32,071 38,489 37,496
Margin (%) 20.8 21.2 24.6 23.1
Total Tax 6,838 7,228 8,524 7,755
Effective tax rate (%) 22.1 22.5 22.1 20.7
Profit after Tax 24,113 24,843 29,965 29,741
Minority interest 211 187 298 20
Share Profit from Associates 31 (6) - -
Adjusted PAT 23,902 24,656 29,667 29,721
YoY gr. (%) 0.1 (3.4) 20.8 39.7
Margin (%) 16.0 16.3 18.9 18.3
Extra Ord. Income / (Exp) - - - -
Reported PAT 23,902 24,656 29,667 29,721
YoY gr. (%) 0.1 (3.4) 20.8 39.7
Margin (%) 16.0 16.3 18.9 18.3
Other Comprehensive Income - - - -
Total Comprehensive Income 23,902 24,656 29,667 29,721
Avg. Shares O/s (m) 5,703 5,706 5,741 5,525
EPS (Rs) 4.2 4.3 5.2 5.4
Source: Company Data, PL Research
Key Financial Metrics
Y/e Mar FY20 FY21 FY22E FY23E
Per Share(Rs)
EPS 15.8 18.2 21.7 25.0
CEPS 19.5 23.0 30.3 34.9
BVPS 92.7 93.2 115.5 137.1
FCF 14.2 14.3 14.9 17.6
DPS 0.9 1.0 2.9 2.9
Return Ratio(%)
RoCE 15.6 18.9 19.6 19.5
ROIC 17.2 21.0 21.1 20.0
RoE 16.9 19.4 20.4 19.8
Balance Sheet
Net Debt : Equity (x) (0.5) (0.5) (0.5) (0.6)
Debtor (Days) 62 56 56 56
Valuation(x)
PER 27.2 23.7 19.9 17.2
P/B 4.6 4.6 3.7 3.1
P/CEPS 22.1 18.7 14.2 12.3
EV/EBITDA 18.9 15.4 11.5 9.5
EV/Sales 3.8 3.7 2.9 2.4
Dividend Yield (%) 0.2 0.2 0.7 0.7
Source: Company Data, PL Research
Wipro
April 16, 2021 12
Price Chart Recommendation History
No. Date Rating TP (Rs.) Share Price (Rs.)
1 05-Apr-21 BUY 476 417
2 05-Mar-21 BUY 474 439
3 14-Jan-21 BUY 493 459
4 04-Jan-21 BUY 434 388
5 23-Dec-20 BUY 415 364
6 19-Nov-20 BUY 415 345
7 14-Oct-20 BUY 415 376
8 05-Oct-20 BUY 350 313
9 01-Oct-20 BUY 350 314
10 15-Jul-20 BUY 257 225
Analyst Coverage Universe
Sr. No. Company Name Rating TP (Rs) Share Price (Rs)
1 Coforge BUY 3,020 2,924
2 Cyient BUY 683 666
3 HCL Technologies BUY 1,168 1,001
4 Infosys BUY 1,632 1,397
5 L&T Technology Services BUY 3,006 2,721
6 Larsen & Toubro Infotech BUY 4,394 4,121
7 Mindtree BUY 2,326 2,068
8 Mphasis BUY 1,869 1,749
9 Persistent Systems BUY 2,017 1,954
10 Redington (India) BUY 189 184
11 Sonata Software BUY 537 522
12 Tata Consultancy Services BUY 3,636 3,247
13 TeamLease Services BUY 4,002 3,774
14 Tech Mahindra BUY 1,143 990
15 Wipro BUY 476 417
16 Zensar Technologies BUY 290 276
PL’s Recommendation Nomenclature (Absolute Performance)
Buy : > 15%
Accumulate : 5% to 15%
Hold : +5% to -5%
Reduce : -5% to -15%
Sell : < -15%
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly
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Wipro
April 16, 2021 13
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