1
Please refer to important disclosures at the end of this report
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Wipro Ltd is a global information technology, consulting and outsourcing
company. For 1QFY2018, the company has given a revenue guidance of
US$1,915-1,955mn implying a US$ qoq growth of (2)-0% in CC terms. We
expect US$ and INR revenue CAGR to be at 5.6% over FY2017-19E. The
company, as part of its vision for 2020 is targeting to reach US$15bn revenues
with 23% EBIT margin, implying revenue CAGR of ~20% over the next four
years. If the margins expand by 300bps, then it would imply an even higher
CAGR for earnings. However, on the acquisition front, the company has been
very aggressive in comparison to its peers. The new CEO of the company has put
in place an aggressive target of 20% revenue CAGR over the next four years,
with much improved profitability (where the company has significant levers in the
form of automation and improving utilization levels), which looks steep in the
given circumstances. On the valuation front, the stock is currently trading at
13.5x its FY2017E and 12.9x its FY2019E EPS, i.e. at a discount to its peers,
while we expect the gap to narrow down once the company’s performance come
in-line with its peers in terms of growth and profitability. The Company has been
maintaining a healthy dividend payout of 24.95% (Div yield: 1.20%). The
company has reported a healthy return on equity (RoE) of 23.7% for the last 3
years. Hence Buy.
BUY
CMP `507
0.4
Reuters Code
WIPR.BO
2
BSE Sensex
30,188
Nifty
9,401
Face Value (`)
IT
Market Cap (` cr)
1,23,296
52 Week High / Low
578/410
Avg. Daily Volume
2,58,931
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Wipro
Others | IT
May 15, 2017
2
Wipro | IT
May 15, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Wipro
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)