Ashish Chopra (Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424 Sagar Lele (Sagar.Lele@MotilalOswal.com); +91 22 3982 5585

17 December 2015

Update | Sector: Technology

Wipro CMP: INR555 TP: INR600 (+8%) Neutral

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Designing Digital prowess

Takeaways from our meeting with Mr Rajan Kohli – Head, Wipro Digital

We met Mr Rajan Kohli, who heads WPRO’s Digital initiatives, to understand the addressable opportunity for WPRO, its strategic approach and capabilities in the segment.

While Digital is a big opportunity for service providers, success in Digital is a function of combining capabilities in: [1] strategic and technical consulting, [2] designing, and [3] agile and iterative development.

WPRO’s holistic approach in Digital is substantiated by acquisition of DesignIt, which helps complete the “Imagination to Execution” loop, as WPRO’s technical capabilities drive implementation of the ideas and strategy laid out by DesignIt.

If we include Digital-related (which are not accounted in Wipro Digital), the larger piece contributes ~14% to WPRO’s revenues today

While the scale may be small today, its capabilities harbor potential to drive revival in growth for the company in due course.

Raison d’etre: Three-pronged need for a separate entity The carving out of Wipro Digital as a separate entity is a function of three main factors: 1. In terms of talent, Digital projects require engineers capable of developing

technology at the front end as well as backend (or in other words, full stack developers). Such personnel have strong algorithmic capabilities in addition to knowledge of multiple open source technologies, and have to be sourced amidst competition from start-ups.

2. Digital requires selling to stakeholders beyond the CIO. WPRO’s Design team (courtesy DesignIt acquisition) and Strategy team bring on the table the skill sets that enable foot-in-the-doors of CXOs other than the CIO.

3. Digital is more than a technology, and requires a change in the organizational DNA. At the very core, it needs the teams to be agile. Delivery to clients happens in one-to-two week stints through iterative models using agile / dev-ops based methodologies.

What does Wipro Digital address? According to WPRO, ~80% of the clients’ incremental IT budgets are being

allocated towards Digital. This is coming at the cost of (spending cuts in) legacy areas. Through Wipro Digital, the company’s endeavor is to grow this 80% incremental piece faster than the decline in traditional services. Wipro Digital addresses this incremental / new areas of client spending, which can be classified as follows: 1. Spends that fall under the Chief Marketing Officer (CMO) – these are

broadly categorized into: User Experience – this is an area where multiple technology companies

have built capabilities, from start-ups to large organizations, and

BSE Sensex S&P CNX 25,494 7,751

Stock Info Bloomberg WPRO IN

Equity Shares (m) 2,462.4 M.Cap.(INR b)/(USD b) 1,423/20.6 52-Week Range (INR) 677/513

1, 6, 12 Rel. Per (%) 1/6/8 AvgVal (INR m) 1034 Free float (%) 26.6

Financial Snapshot (INR Billion) Y/E Mar 2015 2016E 2017E Sales 469.5 513.6 585.7 EBITDA 104.6 114.8 135.3 PAT 86.6 93.0 105.5 EPS (INR) 35.1 37.8 42.8 EPS Gr. (%) 10.9 7.6 13.5 BV/Sh. (INR) 166.1 181.7 208.9 RoE (%) 23.0 21.8 22.0 RoCE (%) 20.2 19.0 20.4 P/E (x) 16.5 15.3 13.5 EV/EBITDA (x) 12.2 10.9 9.0

Wipro

17 December 2015 2

Campaign Management – this is a totally new area where Accenture has built capabilities through multiple acquisitions (avVenta and AD.Dialeto)

2. Internet of Things, which today holds immense promise for Enterprises to lower operational expenses, generate new revenue streams, and provide desired customer experience.

3. Higher level Analytics with cognitive and prescriptive capabilities, which are much more complex than Descriptive and Diagnostic Analytics.

4. Cloud – which is simplifying the real estate for customers. Cloud remains a double-edged sword, as revenue pie for service providers will reduce. That said, there will be a lot of spending and business opportunity in cloud migration over the next five years.

Wipro’s Digitization offering is a broader category and spans beyond Wipro Digital. It includes work that falls in four broad categories: 1. Digitization process of clients starts with Re-imagination of existing

processes / strategies / technology landscape. In the case of customers who are well entrenched as far as traditional IT Services are concerned, proposition at this layer can facilitate opportunity to gain incremental share of the budgets.

2. This is followed by Application rationalization – modifying the existing codes to enable them in the new environments. This can be handled by separate set of vendors, and hence, acts as the second entry point in the clients’ Digital cycles – although with relatively lower value add.

3. Digitization also involves straight through processing and Cognitive intelligence – which deals with providing the next level of efficiencies by taking out manual processes wherever feasible.

4. Lastly, putting applications / systems of the cloud and offering flexibility of use-basis payments are other components of the journey.

Exhibit 1: Elements of Digitization

Source: Company, MOSL

If we include Digital-related services (which are not accounted in Wipro Digital)

like Ecommerce work in Retail, High performance computing, Business Intelligence, Business process management and customer process transformation, the larger piece contributes ~14% to WPRO’s revenues today.

Re-imagine process / business / technology

Application rationalization

Cognitive intelligence

Cloud migration & flexi-pricing models

Wipro

17 December 2015 3

What is the organization structure of Wipro Digital? Given the small size of team as on date, the structure will evolve gradually at

Wipro Digital, but it will definitely not be a pyramid structure. The structure is relatively flat.

Sales organization: Digital from customer’s perspective can be classified into three segments, and the sales organization at Wipro is accordingly aligned: 1. Digital for Business: This is where the stakeholders are the likes of CEOs,

CMOs, etc, and re-imagination business strategy is carried out by them. 2. Digital for Technology: Where Wipro Digital would extend capabilities in

Digital architecture, cloud, dev-ops, agile development, etc. 3. Digital for Operations: Which caters to a COO, for example, and helps drive

efficiencies within the business by using Digital capabilities. What differentiates Wipro Digital from peers? The unique capability that WPRO Digital now possesses compared to its peers is

the design side of Digital – thanks to the acquisition of DesignIt. DesignIt empowers WPRO with the ability to design experiences and consequently business models for end customers. Only Accenture boasts of a similar capability through its acquisition of Fjord. Design capabilities help the customers define end-user experiences and their product journey.

Strategic designers are a very different talent breed that cannot be trained. The segment is all about innovation, which goes towards generating ideas to change the business, and the resulting design is brought to life by technology – which is where WPRO comes in.

WPRO now has marquee references through DeisgnIt of delivering cutting edge design solutions. It is already in the process of cross-selling to its clients. Early experience suggests potential of not only successful cross-sell but also significant downstream opportunity arising out of the same.

CUSTOMER PROFILE SHOWCASED ON DEISGNIT’S WEBSITE

Source: DesignIT

Wipro

17 December 2015 4

What are the new opportunities spawned by Digital for Wipro? Spend in the Business segment of Digital is significantly incremental, expanding

the addressable market for WPRO. WPRO’s readiness here is absolute, given two key factors: 1. Its ability to address the urgency and criticality of Digital spend by the CXOs 2. Its relevance in the customers’ “Imagination to Execution” cycle by bringing

“Experience” capabilities in conjunction with technology capabilities Security spend is also seeing a significant increase. Cloud adoption and size of

database/transactions as well as IOT are big drivers for the same. WPRO claims to have among the strongest capabilities in Security, and its end-to-end Security and Compliance Solution has enabled over 300 organizations across the globe.

Exhibit 2: DesignIt helps complete the “Imagination to Execution” cycle by focusing on all bits that matter

What is the biggest challenge in Digital? One of the key challenges is talent acquisition. Talent is not only restricted to

domain and design capabilities, but also the relatively adept Engineering resources with a programming / algorithmic bent of mind; and not simply be qualified in certain languages. Also, those who can deliver the full stack (front end and backend legacy) are most useful. However, within India, most of such talent is getting cornered by start-ups and organizations like Google and FB. Training is a long-term solution that WPRO is actively driving within the

organization. Another route taken by WPRO is hiring selectively from smaller campuses. Thirdly, for domain / design capabilities, WPRO has also been hiring from

end enterprises. Higher qualification programming engineers are available in US / UK and that is

also part of the reason why the nature of Digital work will be onsite heavy. WPRO has changed the incentive structure for its technology stars as well – to disproportionately reward technical talent irrespective of seniority and designation. WPRO had created a 'fellow' program, offering privileges usually given to vice president level executives to the selected few, who will be part of Wipro's Distinguished Members of Technical Staff.

interaction

insight integration

STRATEGY

DESIGN

TECHNOLOGY

Wipro

17 December 2015 5

How is Wipro addressing the Digital talent situation? Competence in Digital requires technology capabilities that are significantly

different from those that go into serving customers’ needs in traditional IT Services. The full-stack developers that are needed in Digital are typically employed by start-ups. These employees know enough open source tools and have an algorithmic bent of mind to keep pace with the changing landscape.

WPRO conducts a codility test in line with practices followed across the identify globe to hire such developers. Even internally, WPRO has used this test to select high potential talent that is undergoing rigorous three-month training process to get Digital-ready. Apart from internal training, WPRO is also hiring in the market, and will start visiting campuses next year.

The engineers in WPRO digital have a different career trajectory – instead of moving on to become managers, employees are rewarded for their seniority while remaining technical developers even after 5-7 years of coding.

Where is the client skew – old or new? There are obvious opportunities where there is a significant trust that existing

customers have and want help with newer opportunities in digital. The basic premise of these engagements from WPRO’s perspective is helping them think through in a disruptive manner.

However, there is limited benefit in knowing the legacy when it comes to Digital. Many a time, clients are using Digital to identify newer suppliers who are willing to think disruptively for the benefit of the client and are not tied to legacy revenue streams, which may see cannibalization as a consequence.

Certain businesses have higher spend in Digital than the others. Financial Services, Retail & CPG, Media & Telecom are leading the way. Now WPRO is starting to see Healthcare and Life Sciences adopting Digital too. With IoT, even Manufacturing is coming to the fore.

How do some of the operating metrics stack up in Digital? Revenue model is largely T&M still, given the non-specific nature of

requirements. The velocity of time-to-market is more important than the certainty of delivery. This has also prompted WPRO to change the quality assurance processes to levels that understand the Digital delivery better.

Billing rates in Digital are higher. That gets compounded with onsite centricity of the projects. This skew in favor of onsite is likely to remain over the foreseeable future.

OUR VIEW: In Summary – How is Wipro positioned? WPRO ran us through some of the successful case studies of both Wipro Digital

and its acquired entity, DesignIt. It showcased how a number of marquee customers are participating in their Digital journey with WPRO.

While Wipro Digital’s scale may not move the needle on revenue growth yet, its capabilities harbor potential to drive revival in growth for the company in due course. As spending in some of these areas becomes mainstream, the company appears to be well placed to capitalize on the same.

Wipro

17 December 2015 6

Examples of engagements won by Wipro in Digital Chosen by Chelsea Football Club as its official digital and IT partner. WPRO will

support Chelsea FC in its transformation by bringing together strategy, design and technology.

Awarded a strategic Application Development and Management contract by Allied Irish Bank to manage and transform their Digital and Online Channels, Data and Enterprise support services & Applications estate over a period of five years.

Selected by a North American bank to redesign and implement a transformational B2B payment portal.

Appointed by Lawn Tennis Association of the UK as their official Digital Technology Services Partner.

DesignIt wins: Scandinavian Airlines has selected Designit to help the airline rethink and

redesign the future customer experience for its large base of over 4 million frequent flyers.

Appointed by a major European automotive brand to rethink and redesign its entire service experience for customers that visit the brand’s dealerships for maintenance and service work.

Appointed by a global Pharmaceutical brand to work on reimagining and improving its innovation process and to rethink the business offering beyond the core pharmaceutical products of today and drive the digital business transformation of tomorrow.

Wipro

17 December 2015 7

Valuation and view WPRO has been actively investing over the last few years to revive its growth

closer to industry average. Lower utilization, higher S&M, and investments in capability building absorbed more than the tailwind from currency, and were potential levers as revenue growth came through. But growth has underperformed peers. As a result, since 4QFY13, even though utilization is up ~550bp and INR has depreciated 17%; EBIT margin in IT Services at 20.7% is only 70bp higher.

Growth at WPRO has been driven by select segments – Healthcare and Energy & Utilities among verticals and IMS among services. Healthcare grew around 20% CC in FY15 and Energy & Utilities grew 10.2% CC, despite pressure in the vertical in the last two quarters. IMS, even after factoring the impact of cross currencies, grew 19%.

WPRO’s broad-based traction of 2QFY16 was encouraging. With only Energy & Utilities sluggish, there is visibility of that turning around in CY16, as the deals won in vendor consolidation exercise ramp up. On the flip side, its guidance of 5.1-7.2% YoY CC in 3Q implies loss of momentum from 8.3-8.4% of the last three quarters. That limits conviction around growth recovery to industry average in the near term. Consequently, the relatively low valuation multiple may not re-rate anytime soon.

The stock trades at 15.3x FY16E and 13.5x FY17E EPS. WPRO’s valuation discount to peers like TCS and INFO suggests attractive upside potential in the event of growth revival. There have been flashes of broad-based traction at WPRO, but guidance suggests that consistency in the same may yet take some time. We see a combination of Digital and revival in Energy as potential turnaround agents for the company. Our target price of INR600 discounts FY17E EPS by 14x. Maintain Neutral. We would be buyers into: [1] further price correction, and [2] signs of revenue momentum from ramp-ups beginning January 2016.

Key triggers Material uptick in YoY CC growth guidance for 4QFY16 Broad-basing of growth across verticals Uptick in margins from automation and productivity initiatives

Key risk factors Prolonged weakness in Energy & Utilities vertical Rapid appreciation in INR Lopsided growth from few segments

Wipro

17 December 2015 8

Exhibit 3: 1-year forward PE band

Exhibit 4: 1-year forward PB band

Exhibit 5: Comparative valuation Company MCap Rating TP Upside EPS (INR) P/E (x) RoE (%) FY15-17E CAGR (%) USDb (INR) (%) FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E USD rev. EPS TCS 70.7 Neutral 2550 6.3 110.8 123.7 141.8 21.7 19.4 16.9 38.5 38.7 36.5 11.2 13.1 Infosys 37.6 Buy 1225 11.9 53.9 57.3 67.6 20.3 19.1 16.2 26.0 24.0 25.0 10.3 12.0 Wipro 20.6 Neutral 600 8.1 35.1 37.8 42.8 16.5 15.3 13.5 23.0 21.8 22.0 7.5 10.5 HCL Tech 18.0 Buy 1000 17.6 50.4 53.2 62.5 16.9 16.0 13.6 31.7 28.0 27.8 12.8 11.4 TechM 7.5 Neutral 570 8.6 29.6 33.1 40.5 17.7 15.8 13.0 24.5 22.1 22.9 13.1 17.0 Cognizant 37.0 Not Rated

2.3 2.7 3.1 25.8 22.8 19.3 20.7 19.1 18.8 18.2 15.5

Source: Company, MOSL

13.3

25.1

15.7

15.4

6.0 4

11

18

25

32

Dec-

05

Mar

-07

Jun-

08

Sep-

09

Dec-

10

Mar

-12

Jun-

13

Sep-

14

Dec-

15

PE (x) Peak(x) Avg(x)Median(x) Min(x)

2.8

7.0

3.6

3.4 1.4

0.5

2.5

4.5

6.5

8.5

Dec-

05

Mar

-07

Jun-

08

Sep-

09

Dec-

10

Mar

-12

Jun-

13

Sep-

14

Dec-

15

PB (x) Peak(x) Avg(x)Median(x) Min(x)

Wipro

17 December 2015 9

Story in charts

Exhibit 6: Growth guidance not picking up materially…

Source: Company, MOSL

Exhibit 7: …limiting confidence of growth closer to industry average

Source: Company, MOSL

Exhibit 8: Utilization fell during the quarter

Source: Company, MOSL

Exhibit 9: S&M spend acting as a lever (indexed at 100)

Source: Company, MOSL

Exhibit 10: Lever of FPP continues to play…

Source: Company, MOSL

Exhibit 11: …and gradual improvement in offshore proportion is a potential lever

Source: Company, MOSL

1.0 1.2

2.2 1.8

0.6

3.0 2.7

3.0

0.9

2.9 3.0

2.0

0.3

2.5

1.5

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16E

Midpoint of QoQ CC growth guidance (%)

5,221 5,921 6,218 6,618 7,082 7,426 8,183

18.9

13.4

5.0 6.4 7.0

4.9

10.2

FY11

FY12

FY13

FY14

FY15

FY16

E

FY17

E

Revenue (USD m) Grwoth (%)

76.9

76

.1

73.5

74

.1

75.5

73

.7

71.7

71

.7

71.4

73

.0

72.9

74

.9

76.0

77

.5

75.9

78

.0

79.4

77

.2

81.0

80

.7

77.5

76

.1

77.9

77

.9

74.8

74

.6

73.3

74

.3

74.3

76

.5

77.9

79

.4

78.8

80

.5

81.9

82

.3

1QFY

122Q

FY12

3QFY

124Q

FY12

1QFY

132Q

FY13

3QFY

134Q

FY13

1QFY

142Q

FY14

3QFY

144Q

FY14

1QFY

152Q

FY15

3QFY

154Q

FY15

1QFY

162Q

FY16

Utilization % (incl. trainees) Utilization % (excl. trainees)

100

120

140

160

1801Q

FY11

2QFY

113Q

FY11

4QFY

111Q

FY12

2QFY

123Q

FY12

4QFY

121Q

FY13

2QFY

133Q

FY13

4QFY

131Q

FY14

2QFY

143Q

FY14

4QFY

141Q

FY15

2QFY

15

S&M (IT Serv) USD revenues

45.6

45.8

46.2

48.1

47.4

48.2

50.6

51.3

52.1

53.1

55.1

55.5

54.5

53.4

1QFY

13

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

Revenue proportion fron Fixed price contracts (%)

46

53

49

45

48

Wipro TCS Infosys HCL Tech(last

reported)

TechMahindra

Revenue proportion from offshore (%)

Wipro

17 December 2015 10

Exhibit 12: Operating metrics

3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16

Services Composition (%) IMS 24.9 25.0 25.5 27.2 27.7 27.9 28.0 28.0

BPO 8.7 9.5 9.7 9.2 9.5 9.4 9.3 9.8 Product Engg and Mobility 7.6 7.6 6.9 7.0 7.1 7.6 7.7 7.9 Wipro Analytics

7.1 7.2 7.0 7.1 7.5 7.5

Application Services

50.8 49.4 48.7 48.0 47.5 46.8 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 R&D 10.1 9.8 9.5 9.7 9.8 10.2 10.3 10.5 Consulting 2.4 2.2 2.0 2.0 1.9 1.8 1.7 1.9 Verticals (%)

Global Media & Telecom 13.7 13.9 14.3 13.9 13.8 13.5 13.2 13.4 Finance Solutions 26.4 26.8 26.7 26.0 25.7 26.5 26.8 26.7 Manufacturing & Hitech 18.6 18.0 18.2 18.2 18.3 18.3 18.6 18.7 Healthcare Lifescience 10.6 10.6 10.8 11.2 11.7 11.7 11.2 11.4 Retail & Transportation 14.6 14.5 14.0 13.9 14.1 14.5 15.0 15.1 Energy, Natural Resources & Utilities 16.1 16.2 16.0 16.8 16.4 15.5 15.2 14.7 Geography (%)

Americas 49.9 50.0 49.8 51.0 51.4 51.7 52.5 53.0 Europe 29.6 30.0 29.6 27.8 27.6 26.3 25.6 25.2 India & Middle East business 8.5 8.8 9.1 9.2 9.6 10.7 10.6 10.6 APAC and Other Emerging Markets 12.0 11.2 11.5 12.0 11.4 11.3 11.3 11.2 Customer size distribution (TTM)

> $100M 11 10 10 10 10 11 10 10 > $75M 15 14 14 15 16 15 17 17 > $50M 28 29 29 30 31 31 30 31 > $20M 80 82 84 85 84 86 86 85 > $10M 136 143 143 150 153 150 151 154 > $5M 218 220 224 225 226 231 244 244 > $3M 280 278 293 292 300 311 314 321 > $1M 495 501 511 524 526 542 537 533

Customer metrics

Revenue from Existing customers % 98.1 97.0 99.6 98.6 97.7 96.7 99.6 98.5 Number of new customers 42 59 35 50 44 65 36 67 Total Number of active customers 966 986 1022 1018 1018 1054 1071 1100 Customer Concentration (%)

Top customer 3.7 3.7 3.7 3.5 3.8 3.8 3.3 3.1 Top 5 14.2 13.9 13.4 12.9 12.7 12.6 12.2 11.7 Top 10 23.0 22.6 21.8 21.5 21.0 20.6 20.1 19.8

Source: MOSL, Company

Wipro

17 December 2015 11

Exhibit 13: Operating metrics

3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16

EMPLOYEE METRICS Closing Headcount - IT Services 146,402 146,053 147,452 154,297 156,866 158,217 161,789 163,396

Sales & Support staff - IT Services (average) 11,225 11,172 11,174 11,328 11,603 11,629 12,517 13,068 Utilization (IT Services excl. BPO, IFOX and I&ME)

Gross Utilization (%) 66.0 67.7 68.7 70.0 68.5 70.5 71.3 69.5 Net Utilization (excl support) (%) 72.9 74.9 76.0 77.5 75.9 78.0 79.4 77.2 Net Utilization (excl trainees) (%) 74.3 76.5 77.9 79.4 78.8 80.5 81.9 82.3 Attrition

IT Services excluding BPO and I&ME

Voluntary TTM 14.3 15.1 16.1 16.5 16.5 16.5 16.4 16.4 Voluntary Quarterly Annualized 16.3 15.7 17.0 16.9 16.4 15.6 16.4 16.8 Involuntary Quarterly Annualized 4.2 4.2 - - - - - - BPO - Quarterly 12.6 11.6 11.8 12.0 13.1 13.3 12.0 10.2 BPO - Post training 9.3 8.9 10.1 10.0 9.1 9.6 9.3 8.5 IT SERVICES (EXCL INFOX, BPO, I&ME)

Service Delivery

Revenue from FPP 50.6 51.3 52.1 53.1 55.1 55.5 54.5 53.4 % of onsite revenue 54.1 54.1 54.3 53.7 54.3 53.7 54.6 53.9 % of offshore revenue 45.9 45.9 45.7 46.3 45.7 46.3 45.4 46.1 IMS 5.9 2.9 3.2 8.6 3.2 -0.5 1.5 2.1 BPO 4.1 11.9 3.3 -3.4 4.7 -2.2 0.0 7.6 Product Engg and Mobility 2.9 2.5 -8.2 3.3 2.8 5.8 2.4 4.8 Wipro Analytics

0.0 3.2 -1.5 0.2 6.8 2.1

Application Services

0.0 -1.0 -0.1 -2.6 0.1 0.6

R&D 6.7 -2.0 -0.6 -1.9 3.9 2.4 2.9 4.1 Consulting 2.7 -1.2 -6.1 -8.0 1.8 -3.7 -6.4 14.1 Vertical wise

Global Media and Telecom 1.4 4.0 4.1 -1.0 0.6 -3.3 -1.1 3.7 Finance Solutions 2.9 4.0 0.8 -0.9 0.2 1.9 2.2 1.7 Manufacturing and Hi-Tech 0.7 -0.8 2.3 1.8 1.9 -1.2 2.8 2.7 Healthcare, Life Sciences and Services 8.0 2.5 3.1 5.6 5.9 -1.2 -3.2 3.9 Retail and Transportation 1.5 1.8 -2.3 1.1 2.8 1.6 4.6 2.8 Energy and Utilities 4.9 3.1 -0.1 6.9 -1.1 -6.6 -0.9 -1.3 Geography wise

US 3.1 2.7 0.8 4.3 2.1 -0.6 2.7 3.1 Europe 5.4 3.9 -0.2 -4.4 0.6 -5.8 -1.6 0.5 India & Middle East business 5.4 6.1 4.6 2.9 5.8 10.2 0.2 2.1 Other Emerging markets -5.0 -4.3 3.9 6.2 -3.7 -2.0 1.1 1.2 Client Concentration

Top client 0.2 2.5 1.2 -3.7 10.0 -1.2 -12.2 -4.1 top 2-5 clients 7.0 -0.4 -3.8 -1.3 -4.0 -2.3 2.3 -1.3 Top 6-10 clients 1.7 1.3 -2.3 4.2 -2.2 -4.7 -0.2 4.7 Non top 10 clients 2.6 3.0 2.2 2.2 2.0 -0.7 1.7 2.5

Source: MOSL, Company

Wipro

17 December 2015 12

Financials and valuations

Key Assumptions

Y/E March 2010 2011 2012 2013 2014 2015 2016E 2017E INR/USD Rate 46.1 45.0 48.0 54.3 60.4 62.2 65.8 67.5 Revenues (USD m) 4,391 5,221 5,921 6,218 6,618 7,082 7,426 8,183 Offshore Revenue (%) 50.2 48.3 46.2 46.4 45.9 46.0 46.1 46.8 Total Headcount 108,071 122,385 135,920 145,812 146,053 158,217 176,876 194,876 Net Addition 10,261 14,314 13,535 9,892 241 12,164 18,659 18,000 Per Capita Productivity (USD) 40,630 42,658 43,563 42,643 45,312 44,759 41,982 41,990 Gross Utilization (%) 74.3 71.6 69.0 66.7 66.4 68.7 69.8 70.9 IT Services EBIT Margin (%) 23.4 22.7 20.8 20.5 22.6 22.0 21.2 21.7

Income Statement (INR Million) Y/E March 2010 2011 2012 2013 2014 2015 2016E 2017E Sales 271,242 310,986 318,747 374,256 434,269 469,545 513,643 585,705 Change (%) 5.6 14.7 2.5 17.4 16.0 8.1 9.4 14.0

Operating Costs 179,373 204,639 215,665 250,015 284,383 308,460 336,036 378,316 SG&A 32,822 40,467 36,369 46,245 52,787 56,476 62,800 72,088 EBITDA 66,581 74,091 66,713 77,996 97,099 104,609 114,807 135,301 % of Net Sales 24.5 23.8 20.9 20.8 22.4 22.3 22.4 23.1 Depreciation & Amort. 7,534 8,211 10,129 10,650 11,106 12,823 14,304 15,858 EBIT 59,047 65,880 56,584 67,346 85,993 91,786 100,503 119,442 Margins 21.8 21.2 17.8 18.0 19.8 19.5 19.6 20.4 Other Income 3,369 4,718 8,939 11,250 15,012 19,897 19,341 16,841 PBT 62,946 71,246 65,523 78,596 101,005 111,683 119,844 136,283 Tax 9,293 9,896 12,955 16,912 22,601 24,594 26,567 30,592 Rate (%) 14.8 13.9 19.8 21.5 22.4 22.0 22.2 22.4 PAT 53,653 61,350 52,568 61,684 78,404 87,089 93,277 105,691 Minority Interest -184 -345 -243 -322 -438 -531 -318 -216 Net Income 53,469 61,187 52,325 61,362 77,966 86,558 92,959 105,475 Change (%) 17.2 14.4 -14.5 17.3 27.1 11.0 7.4 13.5

Balance Sheet

(INR Million) Y/E March 2010 2011 2012 2013 2014 2015 2016E 2017E Share Capital 2,936 4,908 4,917 4,926 4,932 4,937 4,940 4,940 Reserves 193,176 234,772 280,397 278,886 338,567 403,045 441,362 508,226 Net Worth 196,112 239,680 285,314 283,812 343,499 407,982 446,302 513,166 Minority Interest & others 8,339 13,710 10,492 10,324 11,440 15,315 18,725 18,725 Loans 62,511 52,802 58,958 63,816 51,592 78,913 92,311 80,298 Capital Employed 266,962 306,192 354,764 357,952 406,531 502,210 557,338 612,189

Gross Block 89,499 99,346 113,369 115,556 127,586 143,166 190,302 226,160 Less : Depreciation 36,041 44,252 54,381 65,031 76,137 88,960 103,264 119,122 Net Block 53,458 55,094 58,988 50,525 51,449 54,206 87,038 107,038 Investments 30,420 49,282 41,961 69,171 63,233 54,644 64,931 64,931 Intangible Assets 57,813 58,369 72,166 56,470 65,358 76,009 83,986 83,986 Other non current assets 13,143 22,682 27,897 25,332 28,135 32,590 33,126 35,146 Curr. Assets 175,094 186,016 234,989 238,232 294,129 382,584 397,749 444,542 Debtors 67,636 85,776 110,353 108,623 124,726 133,869 143,604 163,424 Inventories 7,926 9,707 10,662 3,263 2,293 4,849 2,535 2,890 Cash & Bank Balance 64,878 61,141 77,666 87,869 117,862 164,017 191,658 212,868 Adv., Other Current Assets 34,654 29,392 36,308 38,477 49,248 79,849 59,952 65,360 Current Liab. & Prov 62,966 65,251 81,237 81,778 95,773 97,823 109,492 123,454 Net Current Assets 112,128 120,765 153,752 156,454 198,356 284,761 288,257 321,088 Application of Funds 266,962 306,192 354,764 357,952 406,531 502,210 557,338 612,189 E: MOSL Estimates

Wipro

17 December 2015 13

Financials and valuations

Ratios

Y/E March 2010 2011 2012 2013 2014 2015 2016E 2017E Basic (INR)

EPS 18.8 21.6 21.3 24.9 31.7 35.1 37.8 42.8 Book Value 80.7 98.2 116.5 115.6 139.9 166.1 181.7 208.9 DPS 2.4 4.4 6.0 7.0 8.0 12.0 12.0 13.0 Payout % 12.8 20.3 28.2 28.1 25.3 34.2 31.8 30.3 Valuation (x) P/E 18.3 16.5 15.3 13.5 EV/EBITDA 13.3 12.2 10.9 9.0 EV/Sales 3.0 2.7 2.4 2.1 Price/Book Value 4.1 3.5 3.2 2.8 Dividend Yield (%) 1.4 2.1 2.1 2.2 Profitability Ratios (%) RoE 31.2 28.0 19.9 21.6 24.9 23.0 21.8 22.0 RoCE 24.8 23.0 17.1 18.9 22.5 20.2 19.0 20.4 Turnover Ratios Debtors (Days) 88 90 112 107 98 101 99 96 Asset Turnover (x) 5.3 5.8 5.7 7.0 8.8 9.3 7.5 6.2 Leverage Ratio Debt/Equity Ratio(x) 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2

Cash Flow Statement (INR Million) Y/E March 2010 2011 2012 2013 2014 2015 2016E 2017E

CF from Operations 53,172 68,827 70,711 80,868 97,042 80,015 123,564 143,104

Cash for Wkg. Capital -25,743 -12,374 -16,462 7,501 -11,909 -40,250 24,145 -11,621

Net Operating CF 27,429 56,453 54,249 88,369 85,133 39,765 147,709 131,484

Net Purchase of FA -11,198 -9,847 -14,023 -2,187 -12,030 -15,580 -47,136 -35,858

Net Pur. of Investments -12,742 -28,775 -11,691 -8,949 -5,753 41,476 -18,800 -2,020

Net Cash from Invest. -23,940 -38,622 -25,714 -11,136 -17,783 25,896 -65,936 -37,878

Issue of Shares/Other adj 24,047 3,386 10,663 -42,436 4,919 0 -18,707 0

Proceeds from LTB/STB 8,742 -4,592 2,780 4,368 -11,324 30,937 16,518 -12,013

Dividend Payments -13,678 -25,079 -34,393 -40,212 -45,964 -70,340 -71,283 -77,224

Net CF from Finan. 19,111 -21,568 -12,010 -67,030 -37,357 -19,506 -54,132 -72,396

Free Cash Flow 16,231 46,606 40,226 86,182 73,103 24,185 100,573 95,625

Net Cash Flow 22,600 -3,737 16,525 10,203 29,993 46,155 27,641 21,210

Opening Cash Bal. 42,278 64,878 61,141 77,666 87,869 117,862 164,017 191,658

Add: Net Cash 22,600 -3,737 16,525 10,203 29,993 46,155 27,641 21,210

Closing Cash Bal. 64,878 61,141 77,666 87,869 117,862 164,017 191,658 212,868 E: MOSL Estimates

Wipro

17 December 2015 14

Corporate profile

Exhibit 14: Shareholding pattern (%) Sep-15 Jun-15 Sep-14

Promoter 73.4 73.4 73.4

DII 4.6 4.9 4.6

FII 12.6 12.2 11.0

Others 9.4 9.5 11.0

Note: FII Includes depository receipts

Exhibit 15: Top holders Holder Name % Holding

LIC of India 1.9

Exhibit 16: Top management

Name Designation

Azim H. Premji Chairman

T K Kurien CEO

Suresh C Senapaty CFO

Saurabh Govil Global Head, HR

Satishchandra D COO

Exhibit 17: Director Name Name

Azim H. Premji T K Kurien

Suresh C Senapaty Dr. Ashok S. Ganguly*

Dr. Jagdish N. Sheth* Ireena Vittal*

Narayanan Vaghul* M. K. Sharma*

William Arthur Owens* Vyomesh Joshi*

*Independent

Exhibit 18: Auditors

Name Type

BSR & Co LLP Statutory

Exhibit 19: MOSL forecast v/s consensus EPS

(INR) MOSL

forecast Consensus

forecast Variation

(%) FY16 37.8 37.2 1.5 FY17 42.8 40.9 4.8

Company description Wipro is the third largest Indian IT services company and the largest third-party BPO operator in India. It is the largest third-party R&D services provider globally, employing over 156,000 employees. It offers among the widest range of IT and ITeS services and its corporate governance and transparency are at the highest level in the industry.

Exhibit 13: Sensex rebased

WPRO

OTHER COMPANIES

SECTOR UPDATES

WPRO GALLERY

Wipro

17 December 2015 16

Disclosures This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.

MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.

MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.

Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents.

Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report

MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.

Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412

There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues

Disclosure of Interest Statement WIPRO Analyst ownership of the stock No Served as an officer, director or employee No A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes

Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.

For U.S. Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:

Kadambari Balachandran Email : kadambari.balachandran@motilaloswal.com Contact : (+65) 68189233 / 65249115 Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931

Motilal Oswal Securities Ltd

Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025 Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com