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Wipro Ltd Research Report - 11th May 2016

IT | Published on May 11th 2016

IT

Wipro’s 4QFY2016 results have come in below our expectations. The company’s IT services posted a revenue of US$1,882mn (V/s US$1,902mn expected) up 2.4% qoq. This is against a revenue guidance of US$1,875mn to US$1,912mn for the quarter. In constant currency (CC) terms, the company posted a qoq revenue growth of 2.7%. On the operating front, IT Services’ EBIT margin stood at 20.1% while the overall EBIT margin came in at 18.2% (V/s 18.7% expected), ie an expansion by 34bp qoq. The net profit for the quarter came in flat on a qoq basis at Rs2,235cr (V/s Rs2,237cr expected). The company gave a guidance of IT services revenues being in the range of US$1,901mn-US$1,939mn for 1QFY2017, posting a qoq growth of 1.0-3.0%. We maintain our buy recommendation on the stock with a price target of Rs680. Quarterly highlights: The company’s IT services posted a revenue of US$1,882mn (V/s US$1,902mn expected) up 2.4% qoq. This is against a revenue guidance of US$1,875mn to US$1,912mn for the quarter. In CC terms, the company posted a qoq revenue growth of 2.7%. On the operating front, IT Services’ EBIT margin stood at 20.1% while the overall EBIT margin came in at 18.2% (V/s 18.7% expected), ie an expansion by 34bp qoq. The net profit for the quarter came in flat on a qoq basis at Rs2,235cr (V/s Rs2,237cr expected). On the operating front, the quarterly annualized voluntary attrition dropped from 16.3% in 3QFY2016 to 14.9% in 4QFY2016. Outlook and valuation: The Management remains confident of the business environment and has set a revenue target of US$15bn by 2020, implying a CAGR of 20% over the next four years. However the near term guidance implies a moderate organic growth. We expect USD and INR revenue CAGR for IT services to be at 12.1% and 11.6%, respectively, over FY2016-18E. We recommend a Buy on the stock.

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CMP 539
Target Price 680
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)111,843.90
MCAP NSE (Rs in Cr)111,916.83
P/E (x)13.01
EPS (Rs.)35.36
BV (Rs.)176.27
Div Yield (%)1.32
FV (Rs.)2.00
P/BV (x)2.33
EV/Sales (x)2.18
EV/EBITDA (x)10.62

Shareholding Pattern (%)

Promoter73.0
Foreign14.0
Public & Others6.0
Institution5.0
Corporate2.0
Grand Total100.0

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