ICIC
I S
ecurit
ies –
Retail E
quit
y R
esearch
Result
Update
July 18, 2019
CMP: | 267 Target: | 315 (18%) Target Period: 12 months
Wipro Ltd (WIPRO)
BUY
Growth acceleration to drive margin further…
Wipro’s results were better than our expectations on the margin front.
Further, digital (37.4% of revenue) grew at a healthy 5.6% QoQ, 36.9% YoY
in the quarter. Another highlight was the company added three accounts in
$100 million+ revenue bucket. We expect growth to accelerate in FY21E
with room for margin revision upwards from 18.3% estimated in FY21E.
Digital story & execution pick up to ramp up growth in FY21E
IT services revenue de-grew 0.7% sequentially in constant currency. The
revenue de-growth in Q1 and conservative revenue guidance for Q2FY20E
(0-2% QoQ) was due to deferral of some deals and slower ramp ups of some
projects. The impact of the same was most noticeable in the consumer
business unit segment wherein revenues declined 4.4% QoQ. In addition,
softness in capital markets and weakness in European banks continued to
impact banking & financial services, similar to TCS & Infosys. Going forward,
the consumer segment is expected to revive from Q2 onwards based on
deal pipeline. Further, communication & technology segment is expected to
continue its momentum. Along with this, we believe digital story
acceleration & pick up in execution would result in healthy growth in FY21E.
Digital to be key driver for growth
Digital portion in overall revenue pie continued to rise (37.4% of revenue in
Q1FY20 vs. 28% in Q1FY19). Digital was the main revenue contributor in the
quarter with growth of 5.6% QoQ and 36.9% YoY. The same is expected to
be the main growth driver for the company, going ahead.
Better than expected margin, ~18% margin looks sustainable
IT services EBIT margin came in better than our estimate at 18%. Though
margins in Q2FY20E are expected to be impacted due to wage hikes, we
expect margins to recover from Q2FY20E onwards. We expect IT services
EBIT margin of 18.1%, 18.3% in FY20E, FY21E, respectively. However,
digital acceleration, recovery in high margin verticals and easing of pressure
in traditional services could result in upward revision of margins for FY21E.
Valuation & Outlook
The impact of client specific issues in FY19 has receded with a slow & steady
improvements starting to be seen. The improvement is expected to
progress further in FY21E. Accompanied by digital story & execution pick
up, this would lead to growth ramp up in the long term. Further, room for
margin revision, healthy capital allocation policy and reasonable valuation
compared to peers (~13x FY21E EPS) prompts us to maintain BUY on
Wipro. Hence, we maintain target price of | 315/share (~16x FY21E EPS).
Key Financial Summary
s
Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)
Net Sales 55,040 54,636 58,052 61,672 66,763 7.2%
EBITDA 11,458 10,542 11,938 12,695 15,040 12.2%
Net Profit 8,490 8,008 9,003 9,896 12,018 15.5%
EPS (|) 17.5 12.7 14.9 16.4 20.0
P/E 15.2 21.1 17.8 16.2 13.3
RoNW (%) 16.3 16.6 15.8 15.9 17.5
RoCE (%) 16.9 16.9 17.8 17.3 18.9
Source: Company, ICICI Direct Research
Particulars
Particular Amount
Market Capitalization (| Crore) 160,795.5
Total Debt (| Crore) 9,946.7
Cash and Investments (| Crore) 38,417.6
EV (| Crore) 132,324.6
52 week H/L 301/ 197
Equity capital 1,207
Face value | 2
Key Highlights
Digital with growth of 36.9% YoY in
Q1FY20 led the quarter growth
Digital growth and deal execution to
push growth in FY21E
Expect IT service margins in range of
~18% as sustainable.
Maintain BUY with a target price of |
315
Research Analyst
Devang Bhatt
Deepti Tayal
ICICI Securities | Retail Research 2
ICICI Direct Research
Result Update | Wipro Ltd
Exhibit 1: Variance Analysis EESes
Q1FY20 Q1FY20E Q1FY19 YoY (%) Q4FY19 QoQ (%) Comments
Revenue 14,716 14,656 13,978 5.3 15,006 -1.9
Slower-than-expected start is mainly due to
completion of some large programs and deferral of
certain projects
Employee expenses 10,427 10,396 10,035 3.9 10,426 0.0
Gross Margin 4,289 4,259 3,943 8.8 4,581 -6.4
Gross margin (%) 29.1 29.1 28.2 93 bps 30.5 -138 bps
Selling & marketing costs 1,095 1,079 1,081 1.3 1,099 -0.4
G&A expenses 812 696 861 -5.7 667 21.7
EBITDA 3,033 2,923 2,765 9.7 3,292 -7.9
EBITDA Margin (%) 20.6 19.9 19.8 83 bps 21.9 -133 bps
Depreciation 496 440 434 14.2 560 -11.4
EBIT 2,537 2,484 2,331 8.9 2,732 -7.1
EBIT Margin (%) 17.2 16.9 16.7 57 bps 18.2 -96 bpsIT services EBIT margin declined 20 bps to 18%
mainly on account of one month wage hike impact
Other income 536 451 355 51.2 470 14.2
PBT 3,074 2,935 2,686 14.4 3,202 -4.0
Tax paid 670 645 587 14.2 706 -5.2
PAT 2,387 2,315 2,121 12.6 2,483 -3.9
Key Metrics
Closing employee Count 174,850 173,000 160,846 8.7 171,425 2.0 Recruited 6000 graduates globally this quarter
TTM voluntary Attrition (%) 17.6 17.7 17.1 50 bps 17.6 0 bps
Utilisation ex trainees (%) 85.0 85.0 85.2 -20 bps 85.4 -40 bps
Average $/| 70.4 69.5 68.9 2.2 70.3 0.2
Source: Company, ICICI Direct Research
Exhibit 2: Change in estimates
FY19 Comments
(| Crore) Current Old New % Change Old New % Change
Revenue 58,052 62,929 61,672 -2.0 67,944 66,763 -1.7
EBITDA 11,938 13,370 12,695 -5.0 14,569 15,040 3.2
EBITDA Margin (%) 20.6 21.2 20.6 -62 bps 21.4 22.5 113 bps
Change in margin estimates on the back
of inclusion of ISRE margin impact.
Maintain our IT service margin estimates
PAT 9,003 10,449 9,896 -5.3 11,709 12,018 2.6
EPS (|) 14.9 17.4 16.4 -5.3 19.4 20.0 2.6
FY20E FY21E
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 3
ICICI Direct Research
Result Update | Wipro Ltd
Conference Call Highlights
Management guidance: Wipro has guided that its Q2FY20E IT services
revenues would be in the range of $2039 -2080 million, which translates
to 0-2% QoQ growth. The conservative guidance is on account of a
delay in certain projects while growth would progress as execution of
these deals picks up
Margins outlook: In Q1FY20, IT services EBIT margin declined 20 bps to
18%, though it was above our estimate of 17.4%. The margin decline
was possibly on account of one month wage hike impact. Adjusting for
other operating income, the EBIT margin was at 18.5%. Margins in
Q2FY20E are expected to be impacted by remaining salary increments
(two months impact) though it would be partly offset by onsite-offshore
mix and operational efficiency. Going ahead, margins in a narrow band
of 18% look sustainable. However, digital acceleration, recovery in high
margin verticals and pressure in traditional services coming down could
result in upward revision of margins for FY21E
Other verticals: Besides communication and technology vertical, other
segments reported a muted show. These two verticals are doing well
and are expected to continue the same, going forward. Weakness in
BFSI (31.6% of revenue) is mainly due to softness in capital markets and
weakness in European banks. The management expects this softness to
be temporary and improve as the year progresses. Decline of 4.4% QoQ
in consumer business unit was due to completion of some large projects
and deferral of some. However, it is expected to improve from Q2
onwards based on the deal pipeline. Healthcare & manufacturing
continue to be soft
Digital revenues: Digital business continues to ride on an upward
trajectory, comprising 37.4% of revenue (vs. 28% in Q1FY19) and grew
36.9% YoY in dollar terms
Employee details: The company's closing employee count was at
174,850. It recruited over 6000 graduates globally this quarter. Net
utilisation (ex-trainees) declined 40 bps QoQ to 85.0% due to fresher
hiring and people on bench due to anticipation of certain projects getting
ramped up. Voluntary attrition (TTM) remained flat QoQ at 17.6%. In
terms of visa concerns, Wipro has limited onsite risk as 65.4% of its
workforce in US are locals
Client update: Three clients were added in US$100 million+ bucket
taking the count to 13
Buyback: Upon approval from Sebi, the company intends to complete
the process of buyback of up to 32.3 crore equity shares at | 325 per
share for an amount not exceeding | 10,500 crore. However, the
management would wait for final clarity on the buyback tax rule from
Sebi
ICICI Securities | Retail Research 4
ICICI Direct Research
Result Update | Wipro Ltd
Key Metrics
Exhibit 3: Geography-wise split up
Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20
Revenue by geography (%)
Americas 53.8 56.0 56.1 57.1 58.2 58.7
Europe 27.5 26.1 25.7 25.5 24.6 24.6
RoW 18.8 17.9 18.2 17.4 17.2 16.7
Growth QoQ (%)- Constant currency
Americas 1.6 2.9 3.7 3.7 3.1 0.2
Europe 2.7 -3.0 0.9 2.7 -3.0 -0.4
RoW -1.2 1.1 7.9 -2.3 0.3 -4.3
Source: Company, ICICI Direct Research
Exhibit 4: Vertical-wise break-up
Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20
Revenue by strategic business units (%)
Communications 5.9 5.7 5.8 5.8 5.7 5.9
BFSI 28.7 29.8 30.5 31.4 31.5 31.6
Manufacturing 8.9 8.4 8.3 8.1 8.0 7.9
Technology 14.6 14.5 13.9 13.0 12.6 13.0
Health Business Unit 14.2 13.6 13.0 13.1 13.2 13.2
Consumer Business Unit 15.0 15.3 15.7 15.6 16.2 15.6
Energy,Natural Resources & Utilities 12.7 12.7 12.8 13.0 12.8 12.8
Growth QoQ (%)- Constant currency
Communications -8.1 -1.3 4.2 2.1 -1.2 2.8
BFSI 3.0 3.0 4.4 5.3 1.3 -0.6
Manufacturing 2.9 -5.4 1.7 0.4 -0.7 -2.0
Technology 0.0 -1.3 1.8 -4.2 -2.0 2.7
Health Business Unit 0.6 -4.7 -3.0 2.8 2.1 -1.5
Consumer Business Unit -1.0 2.6 4.8 1.4 5.3 -4.4
Energy,Natural Resources & Utilities 1.6 1.7 4.0 4.6 -0.7 0.2
Source: Company, ICICI Direct Research
Exhibit 5: Service line wise break-up
Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20
Revenue by service lines (%)
Cloud Infrastructure Services 27.6 26.3 25.6 25.0 25.2 25.7
Data, Analytics & AI 7.1 7.2 7.8 7.6 7.2 7.4
Digital operations and Platforms 12.4 12.4 12.9 14.7 14.9 14.7
Industrial & Engineering Services 7.4 7.4 7.4 7.1 7.6 7.6
Modern Application Services 45.5 46.7 46.3 45.6 45.1 44.6
Growth QoQ (%)- Constant currency
Cloud Infrastructure Services 3.4 -4.6 2.6 -0.2 2.3 0.5
Data, Analytics & AI 1.7 1.5 11.1 -0.9 1.3 0.8
Digital operations and Platforms -2.5 -0.6 6.2 16.2 2.3 -2.9
Industrial & Engineering Services 7.4 -1.1 1.9 -2.0 1.7 -0.9
Modern Application Services -0.3 3.3 1.0 1.1 -0.2 -0.9
Source: Company, ICICI Direct Research
Weakness in Continental Europe due to European
banks, capital markets and manufacturing slowness
weighs on the geography
Weakness in BFSI mainly due to softness in capital
markets and weakness in European banks. The
management expects this softness to be temporary
and improve as the year progresses
Communication and technology continue to do well
Healthcare and manufacturing to remain soft
Softness in application services mainly due to
decline in consumer business vertical
ICICI Securities | Retail Research 5
ICICI Direct Research
Result Update | Wipro Ltd
Exhibit 6: Client & human resource matrix
Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20
Client metrics
$1 mn Clients 595 595 584 578 571 564
$10 mn Clients 171 171 177 171 172 166
$50 mn Clients 39 40 39 41 41 41
$75 mn Clients 20 19 19 19 22 23
$100 mn Clients 8 8 9 10 10 13
Headcount, Utilization & Attrition
Closing employee count 159923 160846 171451 172379 171425 174850
Net Utilization (Excluding trainees) 83.4 85.2 85.5 83.2 85.4 85.0
Voluntary Attrition LTM 16.8 17.1 17.5 17.9 17.6 17.6
Source: Company, ICICI Direct Research
Three clients added in US$100 million+ category
taking the count to 13
ICICI Securities | Retail Research 6
ICICI Direct Research
Result Update | Wipro Ltd
Financial story in charts
Exhibit 7: Digital grows strong at 36.9% YoY in Q1FY20
Source: Company, ICICI Direct Research
Exhibit 8: Dollar revenues may grow at 5.8% CAGR in FY19-21E
Source: Company, ICICI Direct Research
Exhibit 9: Maintain our margin estimates for FY20E and FY21E
Source: Company, ICICI Direct Research
21.7 22.1 22.524.1 25.0
26.728.0
31.433.2
34.8
37.4
9.9
4.62.7
9.4
3.7
9.4
1.1
13.3
7.76.3 5.6
0.0
10.0
20.0
30.0
40.0
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
%
Digital as a % of revenue Growth, QoQ
7082
7346
7704
8060
1989
2010
2047
2076
8120
2039
8382 9
088
7.0
3.7
4.94.6
0.91.7
0.7 0.8
2.53.2
8.4
0
3
6
9
1000
4000
7000
10000
FY15
FY16
FY17
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Q1FY20
FY20E
FY21E
%
$ m
illion
Dollar revenue Growth, YoY
22.1
20.5
17.9
15.7
17.5
13.0
19.8
18.2 18.0 18.0 18.1 18.3
12
15
18
21
24
FY15
FY16
FY17
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Q1FY20
FY20E
FY21E
%
EBIT margin (IT services)
Digital business continues to ride on upward
trajectory and constituted 37.4% of revenue (vs. 28
in Q1FY19) and grew 37% YoY in the quarter
ICICI Securities | Retail Research 7
ICICI Direct Research
Result Update | Wipro Ltd
Exhibit 10: PAT trend
Source: Company, ICICI Direct Research
Exhibit 11: One year forward rolling PE
Source: Company, ICICI Direct Research
Exhibit 12: Valuation
Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 55,040 7.4 17.5 (22.7) 15.3 12.2 16.3 16.9
FY18 54,636 (0.7) 12.7 (27.5) 21.1 13.8 16.6 16.9
FY19 58,052 6.3 14.9 18.1 17.9 11.1 15.8 17.8
FY20E 61,672 6.2 16.4 9.9 16.2 10.0 15.9 17.3
FY21E 66,763 8.3 20.0 21.4 13.4 8.0 17.5 18.9
Source: Company, ICICI Direct Research
8653 88868490
8008
21211650
2510 2483
9003
2387
9896
12018
1000
4000
7000
10000
13000FY15
FY16
FY17
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Q1FY20
FY20E
FY21E
| c
rore
PAT
0
200
400
600
800
1000
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
Jan-18
Jul-18
Jan-19
Jul-19
|
Price 24 20 16 12 8
ICICI Securities | Retail Research 8
ICICI Direct Research
Result Update | Wipro Ltd
Exhibit 13: Recommendation History vs. Consensus
0.0
20.0
40.0
60.0
80.0
100.0
0
200
400
600
800
Jul-
19
May-
19
Apr-
19
Feb-
19
Jan-
19
Nov-
18
Oct-
18
Aug-
18
Jul-
18
May-
18
Apr-
18
Feb-
18
Dec-
17
Nov-
17
Sep-
17
Aug-
17
Jun-
17
May-
17
Mar-
17
Jan-
17
Dec-
16
Oct-
16
Sep-
16
Jul-
16
Jun-
16
(%
)
(|)
Price Idirect target Consensus Target Mean % Consensus with HOLD
Source: Bloomberg, Company, ICICI Direct Research
Exhibit 14: Top 10 Shareholders
Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 Premji (Azim Hasham) 31-Mar-19 60.4% 3,630.4 0.0
2 Azim Premji Trust 31-Mar-19 13.3% 797.9 -26.7
3 Life Insurance Corporation of India 31-Mar-19 4.4% 265.2 5.9
4 Stewart Investors 20-Dec-17 1.3% 77.1 -5.3
5 BlackRock Institutional Trust Company, N.A. 30-Jun-19 0.8% 45.6 -0.1
6 The Vanguard Group, Inc. 30-Jun-19 0.6% 33.4 0.0
7 Norges Bank Investment Management (NBIM) 31-Dec-18 0.5% 29.0 2.9
8 ICICI Prudential Asset Management Co. Ltd. 30-Jun-19 0.5% 28.5 -0.5
9 Dimensional Fund Advisors, L.P. 31-May-19 0.4% 22.2 -0.1
10 Azim Premji Philanthropic Initiatives Pvt. Ltd. 31-Mar-19 0.3% 20.8 0.0
Source: Reuters, ICICI Direct Research
Exhibit 15: Recent Activity
Investor name Value Shares Investor name Value Shares
Life Insurance Corporation of India 21.9m 5.9m Azim Premji Trust -98.2m -26.7m
Unigestion 9.5m 2.3m Mirae Asset Global Investments (India) Pvt. Ltd. -8.1m -2.0m
Schroder Investment Management Ltd. (SIM) 6.6m 1.8m IDFC Asset Management Company Private Limited -6.5m -1.6m
Colonial First State Global Asset Management 6.6m 1.5m Marathon Asset Management LLP -5.6m -1.5m
Goldman Sachs Asset Management International 5.4m 1.3m Grantham Mayo Van Otterloo & Co LLC -5.4m -1.4m
Buys Sells
Source: Reuters, ICICI Direct Research
Exhibit 16: Shareholding Pattern
(in %) Sep-18 Dec-18 Mar-19
Promoter 74.31 74.30 73.85
Public 25.21 25.24 25.70
Others 0.48 0.47 0.45
Total 100.00 100.01 100.00
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 9
ICICI Direct Research
Result Update | Wipro Ltd
Financial summary
Exhibit 17: Profit and loss statement | crore
FY18 FY19 FY20E FY21E
Total Revenues 54,636 58,052 61,672 66,763
Growth (%) (0.7) 6.3 6.2 8.3
COGS 38,558 41,303 42,976 45,467
Other Expenditure 5,537 6,099 6,033 6,289
EBITDA 10,542 11,938 12,695 15,040
Growth (%) (8.0) 13.2 6.3 18.5
Depreciation 2,112 1,947 2,068 2,239
Other Income 2,400 2,292 2,821 3,369
Exchange difference - - - -
Net interest expense (583) (738) (738) (738)
Pft. from associates 1 (4) (4) (4)
PBT 10,247 11,542 12,706 15,428
Growth (%) (7.1) 12.6 10.1 21.4
Tax 2,239 2,524 2,795 3,394
PAT before Minority int, 8,008 9,017 9,911 12,034
Minority int. 0 14 15 16
PAT 8,008 9,003 9,896 12,018
EPS 12.7 14.9 16.4 20.0
EPS (Growth %) (27.5) 18.1 9.9 21.4
Source: Company, ICICI Direct Research
Exhibit 18: Cash flow statement | crore
FY18 FY19 FY20E FY21E
PAT before minority int. 8,008 9,017 9,911 12,034
Depreciation 2,112 1,947 2,068 2,239
(inc)/dec in Current Assets (717) (150) (1,050) (303)
(inc)/dec in current Liabilities 623 2,867 4,224 1,972
Taxes paid (2,811) (2,515) (2,795) (3,394)
CF from operations 8,423 11,632 13,073 13,314
Other Investments 5,628 4,486 7,307 10,677
(Purchase)/Sale of Fixed Assets (2,070) (2,084) (2,344) (2,537)
CF from investing Activities 3,558 5,013 477 832
Inc / (Dec) in Equity Capital 2 0 - -
Inc / (Dec) in sec.loan Funds (1,098) (3,888) (3,888) (3,888)
Dividend & Divendend tax (854) (1,023) (6,214) (12,359)
CF from Financial Activities (12,998) (4,937) (5,191) (6,146)
Exchange rate differences 38 53 - -
Opening cash balance 5,271 4,493 15,853 24,213
Closing cash 4,493 15,853 24,213 32,213
*calculated, Source: Company, ICICI Direct Research
Exhibit 19: Balance sheet | crore
FY18 FY19 FY20E FY21E
Liabilities
Equity 905 1,207 1,207 1,207
Reserves & Surplus 47,389 55,605 61,047 67,657
Networth 48,294 56,812 62,254 68,864
Minority Interest 241 264 279 294
Debt - long term 4,527 2,837 2,837 2,837
Debt - short term 9,299 7,110 10,525 11,394
Deffered Tax Liability 306 342 342 342
Other liabilities & provisions 1,346 1,628 1,637 1,637
Source of funds 64,012 68,992 77,874 85,369
Assets
Goodwill 11,758 11,698 11,698 11,698
Intangible Assets 1,811 1,376 1,395 1,416
PPE 6,444 7,060 7,316 7,594
O.non current assets 4,102 4,740 4,740 4,740
Investments 887 815 811 807
Debtors 10,544 10,486 11,141 12,089
Cash & Cash equivalents 4,493 15,853 24,213 32,213
Investments - short term 25,033 22,565 22,565 22,565
O.current assets 10,992 8,724 9,119 8,475
Trade Payable 6,813 8,830 9,537 10,269
OCL & Provisions 5,239 5,495 5,587 5,958
Application of funds 64,012 68,992 77,874 85,369
Source: Company, ICICI Direct Research
Exhibit 20: Key ratios | crore
FY18 FY19 FY20E FY21E
Per share data (|)
EPS 12.7 14.9 16.4 20.0
BV 76.3 94.3 103.4 114.3
DPS 2.0 1.0 5.9 7.2
Operating Ratios
EBIT Margin 15.4 17.2 17.2 19.2
PAT Margin 14.7 15.5 16.0 18.0
Debtor days 70 66 66 66
Creditor days 46 56 56 56
Return Ratios (%)
RoE 16.6 15.8 15.9 17.5
RoCE 16.9 17.8 17.3 18.9
RoIC 24.4 32.7 34.2 41.8
Valuation Ratios (x)
P/E 21.1 17.9 16.2 13.4
EV / EBITDA 13.8 11.1 10.0 8.0
EV / Net Sales 2.7 2.3 2.1 1.8
Market Cap / Sales 2.9 2.8 2.6 2.4
Price to Book Value 3.5 2.8 2.6 2.3
Solvency Ratios
Debt/EBITDA 1.3 0.8 1.1 0.9
Debt / Equity 0.3 0.2 0.2 0.2
Current Ratio 1.8 1.3 1.3 1.3
Quick Ratio 1.8 1.3 1.3 1.3
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 10
ICICI Direct Research
Result Update | Wipro Ltd
Exhibit 21: ICICI Direct coverage universe (IT)
CMP M Cap
(|) TP(|) Rating (| Cr) FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E
Cyient (INFENT) 543 620 Hold 6,530 36.0 42.4 46.6 16.1 13.7 12.4 10.3 9.1 7.5 21.4 21.4 20.7 17.3 18.7 18.1
Eclerx (ECLSER) 679 860Reduce 3,532 72.9 60.0 63.1 12.7 15.5 14.7 8.0 9.1 9.2 28.2 21.5 24.8 24.1 16.5 18.9
Firstsource (FIRSOU) 53 60 Buy 3,502 4.8 5.4 5.9 10.7 9.4 8.6 8.8 7.2 6.2 13.0 14.0 15.7 13.9 13.9 13.8
HCL Tech (HCLTEC) 1,021 1,190 Hold 146,833 62.6 74.7 76.7 17.3 14.5 14.1 12.5 10.1 9.1 27.4 26.5 26.0 23.8 24.5 22.5
Infosys (INFTEC) 791 845 Buy 335,118 32.3 35.4 39.4 23.8 21.7 19.5 16.2 14.8 13.0 30.9 32.9 32.8 22.5 23.7 24.3
MindTree (MINCON) 687 930 Hold 15,417 34.3 45.9 37.7 27.4 20.4 24.9 19.8 13.6 14.1 24.9 29.8 24.4 20.8 22.8 17.0
L&T Intotech (LTINFO) 1,614 1,940 Buy 29,148 64.7 87.3 94.6 26.0 19.2 17.7 23.2 14.3 12.3 36.0 40.4 36.4 28.8 31.0 27.8
NIIT Tech (NIITEC) 1,343 1,395 Hold 7,677 45.6 65.7 76.1 27.8 19.0 16.7 13.8 10.4 8.9 19.4 24.2 24.3 15.8 19.9 20.2
Persistent (PSYS) 610 650 Hold 5,119 40.5 44.0 48.7 15.8 14.6 13.2 9.1 7.1 6.4 19.8 20.5 20.5 15.2 15.0 14.9
TCS (TCS) 2,091 2,080 Hold 790,125 67.4 83.8 88.8 31.2 25.0 23.7 23.0 18.9 17.2 37.6 43.8 43.2 29.6 34.4 33.9
Tech M (TECMAH) 684 845 Hold 67,723 42.8 47.7 51.4 17.6 15.8 14.6 13.4 9.5 8.2 21.5 23.6 23.2 20.2 21.2 19.8
Wipro (WIPRO) 267 315 Buy 160,796 12.7 14.9 16.4 21.1 17.9 16.2 13.8 11.1 10.0 16.9 17.8 17.3 16.6 15.8 15.9
EV/EBITDA (x)P/E (x)
Sector / Company
RoE (%)RoCE (%)EPS (|)
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 11
ICICI Direct Research
Result Update | Wipro Ltd
RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities | Retail Research 12
ICICI Direct Research
Result Update | Wipro Ltd
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