Wipro

Wipro reported weaker than expected performance for Q2FY15, with revenue and
margin missing the expectation. Moreover, the guidance was softer than
PLe/Consensus expectation. Management is still confident of improving growth
momentum in H2FY15 on the back of large deal wins. Moreover, return of
discretionary spend in the US and Outsourcing penetration in Continental Europe
makesdemandoutlookhealthier.RetainBUY.

October22,2014
ShashiBhusan
shashibhusan@plindia.com
+912266322300

Missed expectation Cross currency impact: Wipro reported Q2FY15 results

below expectation. IT Services (USD) revenue grew by 1.8% QoQ (3% @cc,
PLe/Cons.: 3%) to US$1,772m (PLe: US$1,792m, Cons: US$1,795m). Overall
revenue grew by 4.9% QoQ to Rs116.8bn (PLe: Rs115.8bn, Cons.: Rs116.8bn).
Operatingmarginserodedby175bpsto18.6%(PLe:20.0%,Cons:20.5%),dueto
wage hike and cross currency movement. EPS declined by 1% QoQ to Rs8.47
(PLe:Rs8.90,Cons:Rs8.61).

1,432.3
2,454.0
2263

H2FY15 likely to be stronger, but client specific issues drags near term:
Management continues to assert for stronger H2FY15 than H1FY15. However,
the weakness in Q3FY15 guidance was attributed to rampdown in selected
clientsinCommodityrelatedsectorduetoweaknessinprice.However,thereis
nolossinwalletsharewithclients.Themanagementseesimprovementindeal
pipelinealongwithimprovedwinrate.Weexpectrevenuegrowthtoaccelerate
inQ4FY15yieldingstrongerFY15exitrate.

73.43%
9.09%
4.55%
12.93%

Hiring uptick Indicate improving momentum ahead: Wipro total headcount

grew by 4.6% QoQ, the strongest since Q3FY10. The company continues with
their JIT hiring along with equal mix of fresher and lateral. We see strong
employeeadditionasanearlyindicationofplannedrampupsahead.Moreover,
themanagementseesuptickinutilizationfromthecurrentlevel

Valuation&RecommendationRetainBUY,withreviseTPofRs650:Wesee
improvementinthewinratetodriverevenuemomentuminCY15,alongwith
available margin levers that would accelerate earnings momentum. However,
weseeneartermweaknessinstockduetoweakerthanexpectedguidance.We
retainBUYrating,withareviseTPofRs650,16xFY16Eearningsestimate.

HussainKagzi
hussainkagzi@plindia.com
+912266322242
Rating
Price
TargetPrice
ImpliedUpside
Sensex
Nifty

BUY
Rs584
Rs650
11.3%
26,787
7,996

(PricesasonOctober22,2014)
Tradingdata
MarketCap.(Rsbn)
Shareso/s(m)
3MAvg.Dailyvalue(Rsm)
Majorshareholders
Promoters
Foreign
DomesticInst.
Public&Other
StockPerformance
(%)
1M
6M
Absolute
0.4
10.0
Relative
1.9
(7.7)
HowwedifferfromConsensus
EPS(Rs)
PL
Cons.
2015
35.5
35.6
2016
40.0
40.0

12M
13.4
(15.0)
%Diff.
0.2
0.1

PricePerformance(RIC:WIPR.BO,BB:WPROIN)

Keyfinancials(Y/eMarch)
Revenues(Rsm)
Growth(%)

EBITDA(Rsm)
PAT(Rsm)
EPS(Rs)
Growth(%)
NetDPS(Rs)

2013
374,256
17.4
78,181
61,684
25.0
17.1
6.9

2014
434,269
16.0
97,101
78,394
31.8
26.9
9.4

2015E
475,294
9.4
105,279
87,605
35.5
11.7
9.0

2016E
524,138
10.3
115,015
98,656
40.0
12.6
9.0

2013
20.9
21.7
20.5
3.6
17.3
23.3
5.1
1.2

2014
22.4
25.0
24.2
3.1
13.8
18.4
4.2
1.6

2015E
22.2
23.3
22.3
2.7
12.0
16.4
3.5
1.5

2016E
21.9
22.1
21.3
2.3
10.3
14.6
3.0
1.5

Oct14

Aug14

Jun14

Apr14

Feb14

Dec13

Oct13

(Rs)
700
600
500
400
300
200
100
0

Source:Bloomberg

Profitability&Valuation
EBITDAmargin(%)
RoE(%)
RoCE(%)
EV/sales(x)
EV/EBITDA(x)
PE(x)
P/BV(x)
Netdividendyield(%)
Source:CompanyData;PLResearch

PrabhudasLilladherPvt.Ltd.and/oritsassociates(the'Firm')doesand/orseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresultinvestorsshouldbeawarethat
theFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthereport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.

Pleaserefertoimportantdisclosuresanddisclaimersattheendofthereport

Q2FY15ResultUpdate

Crosscurrency&clientissueserodedotherwiseinlinequarter

Wipro

ConferenceCallHighlights
Positives
Guidance:US$1,8081,842m(2to4%QoQgrowth)
(Exhibit:2,5)

Hunting:50newclientwins/Farmingcontinuestobethefocus
(Exhibit:9)

GrossUtilization:70.0%(Q1FY15:68.7%),
NetUtilization(excl.Support):77.5%(Q1FY15:76%)
NetUtilization(excl.Trainees):79.4%(Q1FY15:77.9%
(Exhibit:10)

HealthcareandLifesciencesgrew5.6%QoQ(17%YoY)

Negatives

Operatingmarginerodedby175bpsto18.6%

Topclientgrewby3.7%QoQ
Top25clientsgrew1.3%QoQ
Top610clientsgrew+4.2%QoQ
(Exhibit:8)

Hedge:US$2.1bn

Voluntaryquarterlyannualizedattritionat16.9%(Q1FY15:17%)

Source:PLResearch

Analysis
Webelieveguidanceof3%QoQisjustshortofconsensus/PLe
expectation.Weaknessinguidancewaslargelyattributedtoramp
downswithtopclientsrelatedtocommodity(Energy&
Manufacturing).WeexpectmomentumtogetstrongerinH2FY15.
Hence,weexpectrevenuemomentumtogetstrongerinFY16.
Wearefactoringin~7.5%YoYgrowthinUSDterminFY15.
Wiprosinvestmentinclienthuntinghasstartedshowingtraction.The
newlogowinshavemoderatedthisquarterbutthequalityoflarge
dealwinshasimproved.Managementindicatedfocusonmining
newer/smallerclientsthathashigherpropensitytospend.However,
focusandstrategyofminingthelargeclientscontinues.
WiprohasmadesteadyinvestmentinS&M(0.9%QoQ).Accordingto
themanagement,theinvestmentmadebythecompanyisinthevalue
creationteam(moreofsolutionarchitect).Theinvestmentislikelyto
helpthecompanywinmoreoflargedealswhereinthecustomeris
lookingtorestructuretheirinfrastructure.
Utilizationforthecompanystartedinchingupafterhittingthelowest
levelinQ3FY14(sinceQ4FY07)acrossallthethreemeasured
parameters.Utilizationhasincreasedsteadilyandlikelytofurthergo
upfromhere.
Webelieve,thecompanyhasmadeinvestmentsinresourceswhich
couldbeutilizedtounleashgrowthopportunities.Theassuringbody
languageofthemanagemententhuseconfidenceregardinglarge
dealclosures,forwhich,thecompanymusthavemadeinvestments.
Managementwasconfidentaboutgrowthinthevertical.Accordingto
them,theconsolidationinpharmaceuticalindustry,IPsinpayerside
andregulationchangesinproviderssideisdrivingthegrowth.They
continuetoexpectstronggrowthinthevertical.Manufacturingand
HiTechareexpectedtogrowaheadofgroupsrevenue,whereas
weaknessinretailislikelytopersist.
Analysis
Operatingmarginerosionforthequarterwashigherthanexpectation
despitetailwindsduetocurrencydepreciation,utilization
improvement,offshoreshift,andFPPimprovement.Themanagement
soundedoptimisticaboutpossibilityofmarginimprovementin
H2FY15.
Wiprosfocusonclientmininghitroadblockduetorampdownsin
coupleoftop10clients.TheirinvestmentinfarmingwithMegaand
GammaaccountshasresultedingoodmomentumwithTop5
accountsonYoYbasis.
Weexpecthorizonofclientminingto138clientstostartshowing
results.However,thefocusnowshiftstominingsmaller/newclients.
Wiprohasabiggerhedgebookthanitspeers.However,ithas
declinedonQoQbasis.
Managementwasconfidentaboutmanagingtheattritionandseesno
supplysideconstraintforthecompany.ThekeyareawhereinWiprois
witnessinghighattritionis25yearsofexperienceandnicheskills
(likeSMAC).
However,themanagementseesnopressureonmarginduewage
inflation.

October22,2014

Exhibit1:

Wipro

Missedexpectationonallcounts

IFRSConsolidated(RSm)

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoY

PL(e)

Cons(e)

Var(PLe)

1,772

1,740

1.8%

1,678

5.5%

1,792

1,793

1.1%

116,838.0

111,358

4.9%

110,053

6.2%

115,812

116,783

0.9%

21,739.0

22,673

4.1%

22,555.0

3.6%

23,162.5

23,943

6.1%

18.6%

20.4%

175bps

20.5%

189bps

20.0%

20.5%

139bps

PBT(Rsm)

27,182.0

27,122

0.2%

27,504

1.2%

28,055

27,435

3.1%

Tax(Rsm)

6,199.0

5,942

4.3%

5,754

7.7%

6,172

6,248

0.4%

TaxRate

22.8%

21.9%

90bps

20.9%

188bps

22.0%

22.8%

81bps

PAT(Rsm)

20,848.0

21,032

0.9%

21,647

3.7%

21,866

21,187

4.7%

8.47

8.55

0.9%

8.81

3.8%

8.90

8.61

4.8%

CombinedITRevenue(US$m)
ConsolidatedSales(Rsm)
OperatingProfit(Rsm)
OPM

EPS(Rs)
Source:CompanyData,Bloomberg,PLResearch
Exhibit2:

GuidanceBelowPLe/Consensusexpectation

Q3FY15g Q3FY15g Q3FY15g

(Low)
(High)
(avg.)
1,772
1808
1842
1825

Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15

ITServicesRev(US$m)
QoQGrowth

1541

1577

1585

1588

1631

1678

1720

1,740

1.7%

2.3%

0.5%

0.2%

2.7%

2.9%

2.5%

1.2%

1.8%

2.1%

4.0%

3.0%

Source:CompanyData,Bloomberg,PLResearch
Exhibit3: RevisingestimatesdownforFY15andFY16
New

Old

Revision

FY15E

FY16E

FY15E

FY16E

FY15E

FY16E

475,294

524,138

488,922

545,933

2.8%

4.0%

OperatingMargin(%)

19.5%

19.5%

20.3%

20.7%

83bp

120bp

EPS(Rs)

35.68

40.13

36.13

41.91

1.3%

4.2%

Revenue(Rsmn)

TargetPrice(Rs)

650

680

4.4%

Source:CompanyData,PLResearch
Exhibit4: BFSIandGMTdroverevenuedecline,Manufacturingimpactedmargindecline
SegmentRevenue(inUS$mn)

Q2FY15

QoQ

YoY

FinancialServices

460.6

0.9%

7.0%

Healthcare&Lifesciences

197.4

5.6%

19.8%

Retail&CPG

246.7

1.2%

2.1%

Energy&Utility

297.2

6.7%

15.4%

ManufacturingandHiTech

322.5

1.9%

4.2%

Media&Telecom

246.5

1.2%

8.5%

FinancialServices

22.0%

(162)

(53)

Healthcare&Lifesciences

19.9%

102

118

Retail&CPG

21.1%

(59)

(74)

Energy&Utility

27.3%

21

48

ManufacturingandHiTech

20.3%

(258)

(323)

Media&Telecom

23.0%

(197)

48

SegmentMargins

Source:CompanyData,PLResearch

October22,2014

Wipro

Exhibit5: SeasonalityimpactsrevenuegrowthinH1,likelytobouncebackinH2
ITSvcsUSDrevsQoQGr.
6%
4%
2%
0%

Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15(avg)

2%

Source:CompanyData,PLResearch
Exhibit6: AsteadyimprovementinFPPAprecursortohyperautomationbenefits
FixedPrice

80%

Time&Material

65%
50%
35%

Q1FY15

Q3FY14

Q1FY14

Q3FY13

Q1FY13

Q3FY12

Q1FY12

Q3FY11

Q1FY11

Q3FY10

Q1FY10

Q3FY09

Q1FY09

Q3FY08

Q1FY08

20%

Source:CompanyData,PLResearch
Exhibit7: RevenueguidanceforQ3FY15fallingjustshortofinflatedconsensusexpectation
IT Svc revs ($m)

QoQ Gr (%)

1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000

6%
4%
2%
0%

Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15g

2%

Source:CompanyData,PLResearch

October22,2014

Wipro

Exhibit8: Weaknessintopclientsduetorampdown,projectclosuresandrampupdelays
TopClient

Top25Clients

Top610Clients

NonTop10Clients

20%
15%
10%
5%
0%
5%

Q2FY09
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15

10%

Source:CompanyData,PLResearch
Exhibit9: HuntingfocusledbyinvestmentsinS&Mhasresultedinstrongclientaddition
70
60

59

59
53

49

50

44
39

40

37
29312831

30

36
31

26

50
45

394137

29

27

5052
42

35
28

22

20
20

Q2FY08
Q3FY08
Q4FY08
Q1FY09
Q2FY09
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15

10

Source:CompanyData,PLResearch
Exhibit10: UtilizationuptickManagementseesmoreroomforimprovement
GrossUtilization

Utilization(ExclSupport)

Utilization(ExclTraining)

84.5%
79.5%
74.5%
69.5%

Q1FY09
Q2FY09
Q3FY09
Q4FY09
Q1FY10
Q2FY10
Q3FY10
Q4FY10
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14
Q4FY14
Q1FY15
Q2FY15

64.5%

Source:CompanyData,PLResearch

October22,2014

Wipro

Exhibit11: Revenuebyservices
Practices(ITServices+BPOSales)

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

TechnologyInfrastructureServices

474.8

440.3

7.8%

399.5

18.9%

TestingServices

203.7

196.6

3.6%

193.0

5.5%

PackageImplementation

515.5

499.4

3.2%

481.7

7.0%

BPO

163.0

168.8

3.4%

144.3

12.9%

ADM

290.5

313.2

7.3%

339.0

14.3%

ProductEngineering

124.0

121.8

1.8%

120.8

2.6%

35.4

34.8

1.8%

42.0

15.6%

TechnologyInfrastructureServices

26.8%

25.3%

150bps

23.8%

300bps

TestingServices

11.5%

11.3%

20bps

11.5%

0bps

PackageImplementation

29.1%

28.7%

40bps

28.7%

40bps

BPO

9.2%

9.7%

50bps

8.6%

60bps

ADM

16.4%

18.0% 160bps

Consulting

%of(ITServices+BPOSales)

20.2%

380bps

ProductEngineering

7.0%

7.0%

0bps

7.2%

20bps

Consulting

2.0%

2.0%

0bps

2.5%

50bps

Q1FY15 QoQgr.

Q2FY14

YoYgr.

Source:CompanyData,PLResearch
Exhibit12: RevenuebyVerticals
VerticalsComponent

Q2FY15

GlobalMedia&Telecom

246.2

248.8

1.0%

233.3

5.5%

FinanceSolutions

460.6

464.6

0.9%

443.1

3.9%

Manufacturing&Hitech

322.4

316.7

1.8%

318.9

1.1%

HealthcareandLifeSciences

198.4

187.9

5.6%

169.5

17.0%

RetailandTransportation

246.2

243.6

1.1%

248.4

0.9%

Energy&Utilities

297.6

278.4

6.9%

265.2

12.2%

GlobalMedia&Telecom

13.9%

14.3%

40bps

13.9%

0bps

FinanceSolutions

26.0%

26.7%

70bps

26.4%

40bps

Manufacturing&Hitech

18.2%

18.2%

0bps

19.0%

80bps

HealthcareandLifeSciences

11.2%

10.8%

40bps

10.1%

110bps

RetailandTransportation

13.9%

14.0%

10bps

14.8%

90bps

Energy&Utilities

16.8%

16.0%

80bps

15.8%

100bps

%ofTotal

Source:CompanyData,PLResearch

October22,2014

Wipro

Exhibit13: RevenuebyGeography
GeoSpread

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

US

903.5

866.6

4.3%

835.8

8.1%

Europe

492.5

515.1

4.4%

485.1

1.5%

India&MEbusiness

163.0

158.4

2.9%

139.3

17.0%

OtherEmergingMarkets

212.6

200.1

6.2%

218.2

2.6%

US

51.0%

49.8%

120bps

49.8%

120bps

Europe

27.8%

29.6% 180bps

%ofTotal

India&MEbusiness
OtherEmergingMarkets

28.9%

110bps

9.2%

9.1%

10bps

8.3%

90bps

12.0%

11.5%

50bps

13.0%

100bps

Source:CompanyData,PLResearch

Exhibit14: Clientadditionacrossbucket
CustomerSizeDistribution

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

Total>1$m

524

US$1mUS$3m

292

511

2.5%

487

7.6%

293

0.3%

282

3.5%

US$3mUS$5m

225

224

0.4%

220

2.3%

US$5mUS$10m

150

143

4.9%

137

9.5%

US$10mUS$20m

85

84

1.2%

78

9.0%

US$20mUS$50m

30

29

3.4%

27

11.1%

>US$50m

15

14

7.1%

15

0.0%

>US$100m

10

10

0.0%

10

0.0%

Source:CompanyData,PLResearch
Exhibit15: HRmetrics
PeopleManagement

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

154,297

147,452

4.6%

147,216

4.8%

GrossUtilization

70.0%

68.7%

130bps

66.1%

390bps

NetUtilization(excl.Support)

77.5%

76.0%

150bps

73.0%

450bps

NetUtilization(excl.Trainees)

79.4%

77.9%

150bps

74.3%

510bps

VoluntaryTTM

16.5%

16.1%

40bps

13.5%

300bps

VoluntaryQuarterlyAnnualized

16.9%

17.0%

10bps

15.4%

150bps

InvoluntaryQuarterlyAnnualized

12.0%

11.8%

20bps

12.1%

10bps

BPO%Quarterly

10.0%

10.1%

10bps

9.0%

100bps

11,328

11,174

1.4%

11,328

0.0%

154,297

147,452

4.6%

147,216

4.8%

ClosingHeadcount

Attrition
ITServicesexclBPOandI&ME

BPO%PostTraining
Sales&SupportStaff(ITServices)(avg)
Source:CompanyData,PLResearch

October22,2014

Wipro

Exhibit16: Customerconcentration
CustomerManagement

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

24.8

7.0

256.3%

15.1

64.2%

1746.7

1733.2

0.8%

1663.3

5.0%

50

35

42.9%

45

11.1%

1018

1022

0.4%

942

8.1%

TopCustomer

62.0

64.4

3.7%

63.8

2.8%

Top25Clients

166.5

168.8

1.3%

169.5

1.8%

Top5

228.5

233.2

2.0%

233.3

2.0%

Top610

152.3

146.2

4.2%

149.4

2.0%

Top10

380.9

379.4

0.4%

382.7

0.5%

1390.6

1360.8

2.2%

1295.7

7.3%

1.4%

0.4%

100bps

0.9%

55.6%

RevenuefromnewCustomers
Revenuefromrepeatbusinesses
Numberofnewcustomers
TotalNumberofactivecustomers
CustomerConcentration

NonTop10customers
RevenuefromnewCustomers(%)
CustomerConcentration
TopCustomer

3.5%

3.7%

20bps

3.8%

30bps

Top5

12.9%

13.4%

50bps

13.9%

100bps

Top10

21.5%

21.8%

30bps

22.8%

130bps

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

Onsite

693

699

0.9%

679

2.1%

Offshore

597

587

1.7%

574

4.0%

1290.0

1286.0

0.3%

1253.0

3.0%

Q2FY15

Q1FY15

QoQgr.

Q2FY14

YoYgr.

RevenuefromFPP

685.0

670.0

2.2%

603.9

13.4%

RevenuefromT&M

605.0

616.0

1.8%

649.1

6.8%

OnsiteRevenue

692.7

698.3

0.8%

679.1

2.0%

OffshoreRevenue

597.3

587.7

1.6%

573.9

4.1%

RevenuefromFPP

53.1%

52.1%

100bps

48.2%

490bps

OnsiteRevenue

53.7%

54.3%

60bps

54.2%

50bps

OffshoreRevenue

46.3%

45.7%

60bps

45.8%

50bps

Source:CompanyData,PLResearch
Exhibit17: ITServicesrevenue
Revenuein$m

Total
Source:CompanyData,PLResearch
Exhibit18: Onsite/Offshorerevenue
ServiceDelivery

%ofTotal

Source:CompanyData,PLResearch

October22,2014


IncomeStatement(Rsm)
Y/eMarch
2013
NetRevenue
RawMaterialExpenses
GrossProfit
EmployeeCost
OtherExpenses
EBITDA
Depr.&Amortization
NetInterest
OtherIncome
ProfitbeforeTax
TotalTax
ProfitafterTax
ExOditems/Min.Int.
Adj.PAT
Avg.SharesO/S(m)
EPS(Rs.)

374,256
260,665
113,591

35,410
78,181
10,835

11,250
78,596
16,912
61,684

61,684
2,463.0
25.0

2014

2015E

2016E

434,269
295,488
138,781

41,680
97,101
11,106
52
15,062
101,005
22,601
78,404
62
78,394
2,466.0
31.8

475,294

325,513
149,781

44,503
105,279
12,773

20,065
112,571
24,766
87,805
200
87,605
2,466.0
35.5

524,138
359,598
164,540

49,525
115,015
12,911

24,506
126,610
27,854
98,756
100
98,656
2,466.0
40.0

Wipro

BalanceSheetAbstract(Rsm)
Y/eMarch
2013

2014

2015E

2016E

283,812
854
10,324
294,990
50,525
56,470
69,222
86,084
84,838
145,986
144,740
32,689
294,990

343,499
10,909
11,440
365,848
51,449
65,358
60,843
147,899
114,201
170,154
136,456
40,299
365,848

409,011
10,909
11,440
431,360
52,935
65,358
60,843
211,925
189,748
184,663
162,486
40,299
431,360

485,573
10,909
11,440
507,922
55,748
65,358
60,843
285,674
259,913
203,264
177,503
40,299
507,922

QuarterlyFinancials(Rsm)
Y/eMarch
Q3FY14

Q4FY14

Q1FY15

Q2FY15

NetRevenue
EBITDA
%ofrevenue
Depr.&Amortization
NetInterest
OtherIncome
ProfitbeforeTax
TotalTax
ProfitafterTax
Adj.PAT

116,535
28,180
24.2
2,880

3,627
28,927
6,536
22,391
22,391

111,358
25,507
22.9
2,834

4,449
27,122
5,942
21,032
21,032

116,838
24,814
21.2
3,075

5,443
27,182
6,199
20,848
20,848

Shareholder'sFunds

TotalDebt
OtherLiabilities
TotalLiabilities
NetFixedAssets
Goodwill
Investments
NetCurrentAssets
Cash&Equivalents
OtherCurrentAssets
CurrentLiabilities
OtherAssets
TotalAssets

CashFlowAbstract(Rsm)
Y/eMarch
C/FfromOperations
C/FfromInvesting
C/FfromFinancing
Inc./Dec.inCash
OpeningCash
ClosingCash
FCFF
FCFE

2013

2014

2015E

2016E

70,422
(53,410)
(9,840)
7,172
77,666
84,838
109,865
88,209

67,895
(2,774)
(35,041)
30,080
84,121
114,201
45,262
55,317

111,899
(14,259)
(22,093)
75,547
114,201
189,748
97,640
97,640

107,983
(15,724)
(22,093)
70,166
189,748
259,913
92,259
92,259

KeyFinancialMetrics
Y/eMarch
Growth
Revenue(%)
EBITDA(%)
PAT(%)
EPS(%)

Profitability
EBITDAMargin(%)
PATMargin(%)
RoCE(%)
RoE(%)

BalanceSheet
NetDebt:Equity
NetWrkngCap.(days)

Valuation
PER(x)
P/B(x)
EV/EBITDA(x)
EV/Sales(x)

EarningsQuality

112,713
25,923
23.0
3,109

3,518
26,332
6,060
20,397
20,397

2013

2014

2015E

17.4
17.2
17.3
17.1

16.0
24.2
27.1
26.9

9.4
8.4
11.7
11.7

10.3
9.2
12.6
12.6

22.2
18.4
22.3
23.3

21.9
18.8
21.3
22.1

(0.4)
7

(0.5)
8

16.4
3.5
12.0
2.7

14.6
3.0
10.3
2.3

22.0
17.8
10.0
111.5

22.0
19.4
9.0
93.5

20.9
16.5
20.5
21.7

22.4
18.1
24.2
25.0

(0.3)
(2)

(0.3)
(6)

23.3
5.1
17.3
3.6

18.4
4.2
13.8
3.1

Eff.TaxRate
21.5
OtherInc/PBT
14.3
Eff.Depr.Rate(%)
10.7
FCFE/PAT
143.0
Source:CompanyData,PLResearch.

22.4
14.9
9.8
70.6

2016E

KeyOperatingMetrics
Y/eMarch
ITSvcsRevs($mn)
Pricing(US$/Hr)
Currency(USDINR)
Sw.Devp.Cost(%ofSales)
SG&A(%ofSales)
Revenue(US$m)
EBITDAMarginExpansion/(Erosion)(bps)
TaxRate(%)
Source:CompanyData,PLResearch.

2013

2014

2015E

2016E

689,616 744,785 811,816 884,879

38.8
39.2
39.6
40.0
54.5
60.3
60.5
59.0
69.6
68.0
68.5
68.6
9.5
9.6
9.4
9.4
6,865
(4.0)
21.5

7,238
147.0
22.4

7,856
(20.9)
22.0

8,884
(20.7)
22.0

October22,2014

Wipro

PrabhudasLilladherPvt.Ltd.
3rdFloor,SadhanaHouse,570,P.B.Marg,Worli,Mumbai400018,India
Tel:(9122)66322222Fax:(9122)66322209
RatingDistributionofResearchCoverage

%ofTotalCoverage

60%

51.9%

50%
40%

31.7%

30%
16.3%

20%
10%

0.0%
0%
BUY

Accumulate

Reduce

Sell

PLsRecommendationNomenclature

BUY

Over15%OutperformancetoSensexover12months

Accumulate

: OutperformancetoSensexover12months

Reduce

UnderperformancetoSensexover12months

Sell

: Over15%underperformancetoSensexover12months

TradingBuy

Over10%absoluteupsidein1month

TradingSell

: Over10%absolutedeclinein1month

NotRated(NR)

Nospecificcallonthestock

UnderReview(UR)

: Ratinglikelytochangeshortly

This document has been prepared by the Research Division of Prabhudas Lilladher Pvt. Ltd. Mumbai, India (PL) and is meant for use by the recipient only as
informationandisnotforcirculation.ThisdocumentisnottobereportedorcopiedormadeavailabletootherswithoutpriorpermissionofPL.Itshouldnotbe
consideredortakenasanoffertosellorasolicitationtobuyorsellanysecurity.
Theinformationcontainedinthisreporthasbeenobtainedfromsourcesthatareconsideredtobereliable.However,PLhasnotindependentlyverifiedtheaccuracy
orcompletenessofthesame.NeitherPLnoranyofitsaffiliates,itsdirectorsoritsemployeesacceptanyresponsibilityofwhatsoevernaturefortheinformation,
statementsandopiniongiven,madeavailableorexpressedhereinorforanyomissiontherein.
Recipientsofthisreportshouldbeawarethatpastperformanceisnotnecessarilyaguidetofutureperformanceandvalueofinvestmentscangodownaswell.The
suitability or otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an
independentexpert/advisor.
EitherPLoritsaffiliatesoritsdirectorsoritsemployeesoritsrepresentativesoritsclientsortheirrelativesmayhaveposition(s),makemarket,actasprincipalor
engageintransactionsofsecuritiesofcompaniesreferredtointhisreportandtheymayhaveusedtheresearchmaterialpriortopublication.
Wemayfromtimetotimesolicitorperforminvestmentbankingorotherservicesforanycompanymentionedinthisdocument.

October22,2014

10