Company
Analysis
Investment Management
Individual Assignment
By
Riya Shrivastava (10246553)
Overview of Wipro: A Global IT and Consulting
Powerhouse
Started by MH Premji as
1945 a manufacturer of
THE FOUNDATION vegetable and refined
oils
1981 IT
With 40 years of
THE EMERGENCE experience, it entered Conglomera
OF WIPRO
LIMITED
the domain of IT te
Majority shares are held by promoter groups
Family members own around 4% of the company
Rest 69% is held by Traders which in turn are
owned by Premji and Premji foundation
companies
General Public holds 7.8% of total shareholding
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Overview of Wipro: A Global IT and Consulting
Powerhouse
CEO/MD Interview
It took nine years for Wipro to grow from $5 billion to $8 billion in (terms of revenue),
Continue to drive the from 2011 to 2020. It has taken two and a half years to go from $8 billion to $11
transformation billion now.
I could not have a better Board. Because ( it) is supporting us. They are Company that is playing a different role in front
very aware of what we are doing. Every quarter they meet a lot of our of clients
leaders, and they engage.
Read more at
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Board of Directors: Guiding Vision and Strategic
Leadership at Wipro
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Risk Landscape: Navigating Challenges and Safeguarding
Wipro's Future
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ESG Commitment: Sustainable Path to Corporate Responsibility
and Growth Wipro has been transparent about ESG metric through annual ESG reports
13 editions of sustainability report have been published based on GRI
Standard and is independently assured by third party.
They have released their fifth Integrated Report based on Integrated
Reporting framework by IIRC and aligned with Task Force on Climate
Related Financial Disclosure, Sustainability Accounting Standard Board,
UNGC.
For past 10 years they have been participating in leading investor led programs: Dow Jones
Sustainability Index (DJSI) and Carbon Disclosure Project (CDP).
They participate in various other investor led disclosures like FTSE Russel ESG, MSCI ESG and Euronext
Vigeo Emerging Market Sustainability Index, supplier engagement platform Ecovadis,
Dedication to
Sustainability
Long-Term Thinking
Strong Governance
Practice
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Evolution : Wipro's Past Business Overview and Forward
Strategies
Past 3-year Going Forward
Journey
Wipro has been lagging growth compared to its Indian peers
Strengthen clients and partnerships
Accelerating growth by strongly aligning the organization around our key
in IT services.
customers. Co-investing, co-innovating, and co-creating with hyperscalers
and industry leading platform players.
Changed 4 CEOs in past few years. Multiple senior level exits
was also seen. But wipro’s share raised 6% on the day Thierry
Accelerate growth–Focus and scale
Prioritized specific sectors in the chosen geographies/markets, and will
Delaporte was announced as the CEO.
accelerate efforts to drive market leadership in these areas. Americas and UK
continue to be large and key focus markets. Strong growth plans are driving
Growth in double digit because of growing demand in the ambitions for Europe and APMEA.
digitalization. Growth slowed down compared to its peers. Operational excellence
Effective April 1, 2023, they now organize our capabilities across four new
GBLs. The four GBLs will deepen alignment to clients’ evolving business
Acquisition cost and lower margin profile hindering growth. needs and capitalize on emerging opportunities in high-growth segments of
the market
Lead with business solutions
They are also scaling our AI center of excellence and have partnered with
Employee addition was also the lowest
leading generative AI providers and academia for research & development.
Building talent at scale
They have an ambitious program to hire the right talent with diverse
Key Resolution up for backgrounds and skills
Voting
Wipro recently said it would invest $1 billion in artificial intelligence (AI)
over the next 3 years as clients are increasingly betting on this
technology. The IT major is also strengthening its consulting practice.
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Competitive Landscape and Industry Outlook: IT and Consulting
Space
Net Sales (Rs. Cr.) Industry Outlook
L&T Technology Services Ltd. 8013.6
Tata Elxsi Ltd. 3144.72
The near-term outlook remains highly uncertain with downside risks from the
unpredictable course of the geopolitical conflict in Europe, continued impact from
Persistent Systems Ltd. 8350.59
tighter monetary policy, inflation and recession fears, pressures in global energy
Tech Mahindra Ltd. 53290.2 markets reappearing, and financial market volatility
LTIMindtree Ltd. 33183
Wipro Ltd. 90487.6 The demand for digital transformation and infrastructure modernization will
HCL Technologies Ltd. 101456 continue to drive growth for the industry with accelerated adoption of digital and
emerging technologies
Infosys Ltd. 146767
Tata Consultancy Services Ltd. 225458 According to the Strategic Review 2023 published by NASSCOM (“NASSCOM
0 50000 100000 150000 200000 250000 Report”), revenue for the Indian IT services’ sector is expected to witness
growth of 8.3% year-on-year in fiscal year 2023 and next-generation
technologies witness twice the average growth in fiscal year 2023
Profit After Tax(Rs. Cr.)
In fiscal year 2023, the GoI and Indian public sector enterprises are expected
L&T Technology Services Ltd. 1174.1
to spend $9.5 billion on technology with an increased focus on cloud
Tata Elxsi Ltd. 755.19
Persistent Systems Ltd. 921.09 Industry verticals such as Banking & Financial services, Hi-tech, and Retail &
Tech Mahindra Ltd. 4857 Consumer are showing signs of caution in their technology spending in
LTIMindtree Ltd. 4410.3
response to financial market instabilities, cost pressures, lingering inflation, and weak
consumer spending.
Wipro Ltd. 11366.5
HCL Technologies Ltd. 14845 The growth of IT hardware is expected to be driven by computer hardware and
Infosys Ltd. 24108 peripherals due to remote work, online learning, rise of e-commerce, and
Tata Consultancy Services Ltd. 42303
government initiatives that increase digital and internet connectivity
0 10000 20000 30000 40000 50000
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Competitive Forces at Play
High
Multiple companies available
with same offerings
High High
Alternate solutions to IT The IT industry heavily relies on human
problems are now possible due talent as its primary resource. And
to new-age technologies there are abundance of options
available for them
High Moderate
Technology growing so many
Too many players in the
small players are coming
market competing
emerging in the market
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Growth Parameters
Net Sales EBITA PAT
In FY23, the revenue stood at ₹90,488 cr, a In FY23, EBITDA was ₹16,854cr. EBITDA was During Q1 FY24, the company posted a PAT
growth of 14.1% YoY. Ideas business line saw flat despite an increase in sales number. of ₹2,886 cr, a growth of ~13% YoY, due
a growth of 9.4% while icore saw 5.2% YoY The reason for the same was increase in to revenue growth.
growth. employee benefit expenses, travel expenses
and facility expenses. On a QoQ basis, it declined by ~7%,
During Q1 FY24, revenue amounted to
mainly due to de-growth in EBITDA. The
₹22,831cr, a YoY growth of~6% but a de- In Q1 FY24, EBITDA stood at ₹4,196cr, share of profits in associates stood at
growth of~2% on a QoQ basis. The growth resulting in a growth of ~8.7% YoY. However, it ₹0.3cr.
was majorly boosted by Technology and de-grew by 6.9% on a sequential basis.
manufacturing, while all other sectors witnessed
a de-growth on a QoQ basis.
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Profitability
Parameters
EBITA Margin PAT Margin
The decline was primarily due to an
increase in employee compensation
owing to the impact of salary increases. This
was underpinned by an increase in
headcount.
PAT margin declined on account of lower
EBITDA flow through and higher finance cost.
ROCE ROE
The increase in net worth was
mainly on account of increase in
general reserve arising from
profit.
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Efficiency Parameters
Cash Flows Working Capital
Cycle
Cash outflow from financing
activities in FY23 was ₹6,088cr.
This was primarily on account
of dividend, deferred
contingent
Free Cash Flow Asset Turnover
Ratio
The cash conversion was at 115% of net
income versus 91% in the previous year.
Human resource being the main asset for
an IT company, it is imperative to look at the
attrition rates. The LTM attrition rate as of
Q1 FY24 stood at 17.3%
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Solvency Parameters
Debt to Equity Interest Coverage Current Ratio
Ratio Ratio
In Q1 FY22, the company made first ever The company has sufficient resources to meet In FY23, the company’s current ratio was
bond offering in the international its interest obligations. 2.47x. The increase in the ratio can be
markets of $750 million with a 5-year attributed to higher percentage increase
tenor. in current assets as compared to current
liabilities.
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Valuation Parameters
PE Ratio Dividend Yield Key Levels
Wipro is currently trading at a TTM PE The company has been rewarding its
multiple of 18.53x. The industry TTM PE shareholders by providing regular
stands at 28.17x. buybacks of ₹9,500cr in FY21, ₹10,500cr
in FY20 and ₹11,000cr in FY18.
With the renewed focus of the
management towards its growth The company paid a dividend of ₹1 per
prospects from both organic and share in FY23. EPS stood at ₹20.7
inorganic sources, the PE of the company
has seen a re-rating. During June 2023, the Board of Directors
approved a buyback proposal
The stock price has been consolidating near the
accumulation zone since the past few quarters.
Over Valued The zone of ₹360-₹400 is likely to act as a strong
support and can be used by long term investors for
accumulation.
Give more dividend because of which their stock
prices dip as free cash flow decreases
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Quality Parameters
Don’t
Invest
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Key Variables for IT
Industry
Client Concentration Deal Size and Customer
Distribution
Attrition
Rate
Revenue/Employee
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Thankyou!
