Wipro Company analysis

Industry Overview : India is regarded as the premier destination for global IT and ITeS outsourcing, accounting for almost 55% of the global sourcing market in 2010, according to the Ministry of Communications and Information Technology. ITeS sector includes IT hardware, software and services. The country’s cost competitiveness in providing Information Technology (IT) services, which is approximately 3-4 times cheaper than the US, continues to be its Unique Selling Proposition (USP) in the global sourcing market. The Indian IT-BPO sector is estimated to have aggregated revenues of USD 88.1 billion in 2010–2011, with the IT software and services sector (excluding hardware) accounting for USD 76.2 billion of revenues. During this period, direct employment is expected to have reached nearly 2.5 million, an addition of 240,000 employees, while indirect job creation is estimated at 8.3 million. As a proportion of national GDP, the sector revenues have grown from 1.2% in 1997–1998 to an estimated 6.4% in 2010–2011. Its share of total Indian exports (merchandise plus services) has increased from less than 4% in 1997–1998 to 26% in 2010–2011, as per the report of the working group on the IT sector for the 12th Five-Year Plan (2012–17).

The IT-BPM sector in India grew at a Compound Annual Growth rate (CAGR) of 15 per cent over 2010-15, which is 3-4 times higher than the global IT-BPM spend, and is estimated to expand at a CAGR of 9.5 per cent to US$ 300 billion by 2020.  The main growth drivers of the IT and ITeS industry are cost efficiencies, utilization rates, diversification into new verticals, and shifting business and pricing models. India is a preferred destination for companies that are seeking to offshore IT and back-office functions. It also retains its low-cost advantage and is a financially attractive location when viewed in combination with the business environment it offers and the availability of skilled people. The country is also known across the world for its successful export-led software industry. India’s highly qualified talent pool of technical graduates is one of the largest in the world and is available at a cost saving of 60-70 per cent to source countries. This large pool of qualified skilled workforce has enabled Indian IT companies to help clients to save US$ 200 billion in the last five years.   

Software and services exports (including ITeS-BPO), excluding hardware exports, were estimated at USD 59 billion in 2010–11, as per NASSCOM, India’s premier association in the IT sector. Software and services exports constituted more than half of the electronics and IT-ITeS industry’s revenues in 2010–11.  Between April 2000 and March 2011, the computer software and hardware sector received cumulative foreign direct investment (FDI) of USD 10,723 million, according to the Department of Industrial Policy and Promotion (DIPP), which is part of the Ministry of Commerce and Industry and which is responsible for formulating the country’s FDI policy.As per the report of the task force set up by Ministry of Communications and Information Technology (MoC&IT), the demand for electronics hardware in the country is projected to increase from the USD 45 billion in 2009 to USD 400 billion by 2020. The task force has been set up to suggest measures to stimulate the growth of the IT-ITeS and the electronics hardware manufacturing industry in India. According to the executive summary report published by the Department of Electronics and Information Technology, MoC&IT, the sector has grown to become the biggest employment generator in the country; direct employment within the IT-BPO sector was expected to be 2.5 million and indirect employment was estimated to be about 8.3 million in 2010–11. As per NASSCOM estimates, the workforce in the Indian IT sector will touch 30 million by 2020. 

Company Overview. : 

Wipro Ltd., the flagship company of the Azim H Premji group was incorporated in the year 1945. The company started off originally as a manufacturer of vegetable ghee/vanaspati, refined edible oils etc. Today company manufactures and sells products and services ranging from cooking oil and soaps to healthcare instruments and information technology (IT) consulting

Gradually the company has diversified into various other businesses. Today the company offers a diverse range of products, solutions and services in systems, software, consumer care, healthcare, lighting and Infrastructure Technology. 

Wipro’s ADSs are listed on the New York Stock Exchange, and its equity shares are listed in India on the Stock Exchange – Mumbai, and the National Stock Exchange, among others.

Segments

Wipro Infotech– Wipro Infotech is the leading strategic IT partner for companies across India, the Middle East and Asia–Pacific – offering integrated IT solutions. We plan, deploy, sustain and maintain your IT lifecycle through our total outsourcing, consulting services, business solutions and professional services.
Wipro Technologies – Wipro Technologies is the global IT services business division of Wipro Limited. With over 20 offices around the world, Wipro Technologies is one of the leading provider of integrated business, technology and process solutions on a global delivery platform.

Wipro Consumer Care and Lighting– Wipro Consumer Care and Lighting, a business unit of Wipro Limited, has a profitable presence in the branded retail market of toilet soaps, hair care soaps, baby care products and lighting products. It is also a leader in institutional lighting in specified segments like software, pharma and retail.

Wipro Infrastructure Engineering – Wipro Infrastructure Engineering was Wipro Limited’s first diversification in 1975, which addressed the hydraulic equipment requirements of mobile original equipment manufacturers in India. Over the past 25 years, the Wipro Infrastructure Engineering business unit has become a leader in the Hydraulic Cylinders and Truck Tipping Systems markets in India, and intends growing its business to serve the global manufacturing requirements of Hydraulic Cylinders and Truck Tippers.

Wipro GE Medical Systems – Wipro GE Medical Systems is a joint venture between Wipro and General Electric Company. As a part of GE Medical Systems South Asia, it caters to customer and patient needs with a commitment to uncompromising quality. Wipro GE is India’s largest exporter of medical systems, with unmatched distribution and service reach in South Asia. Wipro GE pioneered the manufacture of Ultrasound and Computed Tomography systems in India and is a supplier for all GE Medical Systems products and services in South Asia.

SHAREHOLDING

Financials and Ratios :

 2010-112011-122012-132013-142014-152015-16
Revenue26981.2032910.3034551.8040368.4043708.8047456.10
Net Profit4843.704685.105650.207387.408193.108099
Net Profit Margin18.4114.781719.0619.8818.12
EPS19.7819.0922.9930.0133.2832.91
Book Value86.8899.0598.37119.04140.25165.57
Dividend per Share6678126
Dividend Payout30.4031.4830.5226.7136.1718.30
ROE22.7119.2323.3125.1623.6619.79
ROCE20.3517.4422.9823.9622.7319.02
ROA14.1912.1313.8816.1515.3413.68
Debt to Equity0.220.220.170.150.170.16
Asset Turnover77.0882.0881.6284.7377.1575.51
    

Future Prospects : All over the world, there is reduction in IT Expenditure due to many reasons. Financial performance of the company also looks unattractive. INFOSYS and TCS hits badly and it is expected that Wipro will also show something same.

The company was good performer but for next half year it’s looking difficult.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter

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