WIPRO

FSA Project

Submitted By
Prashanna Jhawar 2009A19
Ankit Dua 2009A22
Ashish Kanchan 2009A46
Ammar Shaikh 2009A63
Sreyash Bhandari 2009B10
1947 Started of as a vegetable oil trading company.
1966 Azim Premji took over the leadership after his
1977 fathers
Entered death .
the Information Technology Sector.
1979 Started developing its own computers.
1981 Started selling the final products.
1988 Crosses the $10 Million mark in annualized
1992 revenues .
Went Global with the IT services division.
2002 Ranked as the 7th software services company in the
2004 world . $1 Billion revenues mark.
Crossed
2009 Has a total employee strength of 112,925.
 • WIPRO has grown at 29%
CAGR and Net Income at
28% CAGR in the last 6
years.
•
• Wipro Corporation revenue at
Rs.27,124 Crores for 2009-
10, 6% YoY
•

• IT Services contribute 75% of

Revenue and 92% of PBIT
–Revenue growth of 6%
and PBIT growth of 18%
•

• IT Products account for 14% of

Revenue and 3% of PBIT
-Revenue growth of 11%
and PBIT growth of 29%
•

• Non IT business contribute

11% of Revenue and 5% of
PBIT
•
 Revenues – IT Services and Products (In $Million)

• Partners to Industry Leaders:

• 858 active global clients as of June 30, 2010
• 150+ fortune 500 customers
•
• Global footprint:
• Listed on NYSE in October 2000
• Present in 54 countries
• 19,000 employees onsite across geographies
•
• Diverse talent pool
• 69 nationalities represented in workforce
• One of the most preferred employers for top class talent
 Vertical Distribution
•

Diversified vertical portfolio with

•

no vertical contributing more than

27%.

• Geographical Distribution
• America contributes less than 60%
•
• Strong presence in emerging markets
•
• Balance to align “Global spend and
Growth in spend”
 • Service Line Distribution
Service Line distribution
•
•
• Differentiated Service lines
contributing over 60% of
Revenues
•
• Total integrated consulting
revenues constitute
>2.6% of Revenue

Revenue contribution of Top customers for Q1’10-11

•New customer contributing around 0.4%
•434 customers with $1 million revenue on trailing 12 month basis
•Top customer contributing 2.9%.
•Top 5 contributing 10.9%
•Top 10 contributing 19.8%
 • Broad based portfolio across Verticals, Geographies,
Service Lines and Customers
•
• Strong ($1B) and Established (20+ years) presence in
some of the key growth markets –India & Middle East
•
• A complete, integrated portfolio of services
•

• Leadership in R&D –worlds largest independent 3rdparty

R&D shop
•
•
 16

• Exports account a major share in overall IT revenues. UK and USA

are the largest export geographies- 79%
• Growth rate for global GDP and India’s net software earnings have a
high correlation co-efficient of 0.81
•
 17

• Key contributor to services sector-contributes to about 5.8% to the total

GDP.
• Among the largest employment generator in the organized sector.
• Revenues estimated at USD 90 billion in 2011-12 with a CAGR of 27%.
• Domestic IT revenues estimated to be USD 27-30 billion with a 5 year
CAGR of 24%
• Industry is well diversified across emerging
• and mature sectors- BPO ,BFSI, Telecom,
• Manufacturing being the top 4.
 18

• Tax Sops
• 24 hour electricity supply
• High quality infrastructure
• IT/ITeS SEZs
• Export subsidies
• FDI is encouraged
• Semiconductor Policy, 2006
• Establishment of a Nodal Agency (STPI)
 19

• Cloud Computing services (IaaS, PaaS, SaaS)

•

• Benefits
• Reduced fixed costs
• Improved utilization of IT resources
• Server idle time reduced
• Enhancing scalability
•

• Challenges
• Loss of control of personal information
• Lock-in with a single vendor
• Security issues
•
 20

Indian IT/ITes Sector Moving Up To The Value Chain

• The primary global off-shoring destination for low-end back-

office services is now emerging as an innovation and
research hub.
• It is estimated to attract substantive investments in the sector.
• Leverage the penetration of the IT segment; complement and
complete end-to-end customer requirements with the aid of
offshore and onshore
• service offerings.
 21

Advantage India – Value Proposition

• Breadth of Service Offering

• Quality/Maturity of processes
• Cost Advantage
• Ease of Scalability
• Global and 24/7 delivery capability
• Firm Foundations in Talent and Infrastructure
• Sustained Investor Confidence
• Transitioning to the Tier 2 and Tier 3 cities
•
 22

Indian IT/ITeS Industry Structure

 23

SWOT Analysis
Segmental Analysis

Revenue
• EBIT
•
Segmental Analysis

EBITDA
• ROCE
•
Segmental Analysis

•IT Services IT Products

•
 Segmental Analysis

Consumer Care & Lighting Business

• Segmental Performance
•

Segment Revenue Operating EBIT Margin

Growth as Margin
compared to
last year

IT Services 5.64% 23.60% 15.80%

IT Products 10.91% 4.60% 3.06%

Consumer 14.13% 13.00% 8.74%

Care,
Lighting &
Others
 Financial Statement Analysis
2010 2009
Liquidity Ratios

Inventory Turnover 15.87 15.64

DSI (days) 23 23
Debtors Turnover 5.32 5.10
DSO (days) 68 71
Creditors Turnover 3.54 3.22
DPO (days) 102 112
Operating Cycle (days) 90 94
Cash-to-Cash Cycle (days) -11 -18
Current Ratio 2.26 1.77
Quick Ratio 1.44 1.17
 Financial Statement Analysis
2010 2009
Profitability Ratios

Net Profit Margin 17% 15%

Gross Profit Margin 54% 54%
EBIT Margin 19% 18%
EBITDA Margin 21% 19%
ROCE 58% 53%
Asset Turnover 1.87 2.46
Leverage Multiplier 0.80 0.77
ROE 25% 29%
Other Income to Total 2% 1%
Income
ROTA 32% 37%
 Financial Statement Analysis
2010 2009
Solvency Ratios

Debt/Equity 21.31 19.43

Interest Coverage 30.63 13.29

Market Comparables

EPS (Rs) 31.78 26.81

P/E 12.11 8.45
DPS (Rs) 6 4
Dividend Payout 19% 15%
Dividend Yield 1.57% 1.78%
Peer Comparison

Revenue
• Net Profit Margin
•
Peer Comparison

Gross Profit Margin

• ROCE
•
Peer Comparison

ROE
• EBIT Margin
•
Peer Comparison

EBITDA Margin
• EPS
•
 Valuation

EV/EBITDA Method
Intrinsic Value INR 482
Recommendation Hold

DCF Method
Intrinsic Value INR 496
Recommendation Hold