25 April 2017
4QFY17
Results Update | Sector: Technology
Wipro
Neutral
BSE SENSEX
29,943
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
9,307
WPRO IN
2,432
1,202.7 / 18.7
578 / 410
-5/-3/-27
840
26.8
CMP: INR495
TP: INR500(+1%)
Pain points to drag performance at least till 1QFY18
Organic revenue flattish QoQ CC:
WPRO’s 4QFY17 CC revenue growth of 1.7% was
in the upper half of its guided band of 1-2%, and largely in line with our estimate of
1.5%. Seven weeks of revenue from Appirio integration (~1.5% contribution) meant
flattish organic revenue in CC terms. For the full year FY17, WPRO’s IT Services
revenue grew 7% YoY in CC (which included acquisitions), EBIT margin shrunk 260bp
YoY to 17.9% and PAT declined 6% YoY to INR83b.
Margins in line excluding one-offs:
IT Services EBIT margin was 17.6% (-70bp QoQ)
in line with our estimate, adjusted for one-offs, viz., [1] gain of INR4,082m from the
sale of EcoEnergy and [2] INR2,851m of impairment charges on certain intangible
assets. Negative impact from full integration of Appirio (-40bp) was partly offset by
operational efficiencies. Overall EBIT margin was 16.1%, implying continued losses
in the Products segment. Adjusted PAT fell 8.3% QoQ to INR19.3b (in-line).
Headwinds to Healthcare/Consumer mar guidance:
WPRO’s CC revenue growth
guidance of -2% to 0% for 1QFY18 reflects the weakness in the Healthcare vertical
due to uncertainty around the Affordable Care Act under the new US President,
continued sluggishness in Communications and uniformly witnessed spending
pressure in Retail. However, it expects steady revival thereafter, reaching industry-
level growth by 4QFY18, as Healthcare bottoms out and as India/ME restructuring is
behind. Profitability too is expected to exhibit a similar trajectory – declining in the
first quarter and then sequentially picking up over remainder of the year.
Valuation view:
We have cut our forward revenue estimates by 2.7-3.0% and
earnings estimates by 7.6-10.9%, factoring in fresh near-term concerns. Over FY17-
19, we expect USD revenue CAGR of 5.5% and EPS CAGR of 6.2%, implying
continued underperformance for now. While valuations at 14.3/13.0x FY18E/19E
appear inexpensive, multiple re-rating will elude as long as portfolio issues continue
to drag growth. Our TP of INR500 discounts FY19E earnings by 13x.
Neutral.
FY16
FY17
4Q
1,955
7,346
7,705
2.7
3.7
4.9
139,875 512,440 550,402
2.2
2.6
9.1
7.4
28.0
30.4
28.9
11.9
12.2
12.8
17.7
20.5
17.9
16.1
18.2
16.1
5,328 21,565 20,254
24.2
22.1
23.2
19,340 88,922 83,326
-8.3
-13.5
2.7
-6.3
8.0
36.1
33.8
181,482 172,912 181,482
84.8
74.9
77.4
47.2
45.9
46.4
Est.
Var.
3QFY17 (% / bp)
1,944
0.5
2.2
55bp
136,157
2.7
-0.5
272bp
-0.1
273bp
29.5 -157bp
13.3 -142bp
17.7
3bp
16.2
-15bp
2,493
113.7
22.5
172bp
18,983
1.9
-10.0
169bp
-15.1
160bp
7.8
182,764
-0.7
81.9
290bp
46.3
87bp
Financials & Valuations (INR b)
2017 2018E
Y/E Mar
550.4
555.7
Net Sales
108.8
112.0
EBITDA
83.3
83.9
PAT
33.8
34.6
EPS (INR)
-6.3
2.3
Gr. (%)
211.7
234.2
BV/Sh (INR)
16.9
15.5
RoE (%)
13.6
12.8
RoCE (%)
14.6
14.3
P/E (x)
2.3
2.1
P/BV (x)
2019E
606.1
125.0
92.6
38.2
10.3
254.4
15.7
13.8
13.0
1.9
Estimate change
TP change
Rating change
Quarterly Performance (Consolidated)
Y/E March
IT Services Revenue (USD m)
QoQ (%)
Overall Revenue (INR m)
QoQ (%)
YoY (%)
GPM (%)
SGA (%)
IT Serv. EBIT (%)
EBIT Ma rgi n (%)
Other i ncome
ETR (%)
PAT
QoQ (%)
YoY (%)
EPS (INR)
Headcount
Uti l excl . tra i nees (%)
Attri ti on (%)
Offs hore rev. (%)
Fi xed Pri ce (%)
1Q
1,794
1.1
122,376
0.8
9.9
30.7
12.2
21.0
18.5
5,286
21.2
21,877
-3.8
4.0
8.9
161,789
81.9
16.4
45.4
54.5
FY16
FY17
2Q
3Q
4Q
1Q
2Q
3Q
1,832
1,838
1,882
1,931
1,916
1,903
2.1
0.3
2.4
2.6
-0.8
-0.7
125,135 128,605 136,324 135,992 137,657 136,878
2.3
2.8
6.0
-0.2
1.2
-0.6
7.1
7.2
12.3
11.1
10.0
6.4
31.4
29.8
29.7
29.1
28.9
29.4
12.4
12.0
12.3
13.0
13.2
13.0
20.7
20.2
20.1
17.8
17.8
18.3
19.0
17.9
17.4
16.1
15.8
16.4
5,138
5,715
5,426
4,848
4,958
5,120
22.4
21.8
22.7
22.9
22.2
23.3
22,354 22,341 22,350 20,518 20,672 21,094
2.2
-0.1
0.0
-8.2
0.8
2.0
7.2
1.9
-1.8
-6.2
-7.5
-5.6
9.1
9.1
9.1
8.3
8.5
8.7
168,396 170,664 172,912 173,863 174,238 179,129
82.3
78.0
77.5
79.7
82.8
81.9
16.4
16.3
16.1
16.5
16.6
16.3
46.1
46.2
45.8
45.6
46.1
46.5
53.4
55.9
56.9
56
56.4
57.7
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531

Wipro
4QFY17:
Revenue at the higher end of the guided range of 1-2% QoQ CC
WPRO’s 4QFY17 revenues grew 1.7% QoQ in constant currency, at the higher
end of its guided band of 1-2%. We expected 1.5% QoQ CC revenue growth. Our
assumption was driven by flat organic revenue and 1.5pp from the integration
of Appirio.
In dollar terms, revenue was USD1,955m, +2.7% QoQ, compared to our estimate
of USD1,944m (+2.2% QoQ). This implied cross-currency tailwinds of 100bp,
against our estimate of 70bp.
In Rupee terms, overall revenue was INR135.8b, -0.8% QoQ, compared to our
estimate of INR136.16b, -0.5% QoQ.
Exhibit 1: Revenue growth of 1.7% QoQ CC in IT services
IT Services (USD m)
2.7
0.2
2.9
2.5
1.2
1.8
1.3
-1.2
1.1
QoQ Growth (%)
2.1
2.4
0.3
2.6
-0.8 -0.7
2.7
Source: Company, MOSL
IT Services EBIT margin was flat at 18.3% against our estimate of 60bp decline to
17.7%.
However, the company’s financials included a one-time gain on account of the
sale of EcoEnergy (INR4,082m), and a one-time impairment charge on certain
intangible assets (INR2,851m).
Adjusted for these, IT services EBIT margins declined by 60bp QoQ to 17.7% - in
line with our estimate.
Overall EBIT margin was 16.1%, in line with our estimate of 16.2%, implying
continued losses in the products segment.
Exhibit 3: Utilization further upped in 4QFY17
Utilization % (incl. trainees)
Utilization % (excl. trainees)
Exhibit 2: IT Services EBIT margin declined by 60bp to 18.3%
IT Services EBIT margin (%)
IT Services SGA as % of Sales
Source: Company, MOSL
Source: Company, MOSL
Adjusted PAT was at INR19.3b, was down 8.3% QoQ, against our expectation of
INR19b (-10% QoQ).
2
25 April 2017

Wipro
Multiple headwinds mar guidance
WPRO guided for -2% to 0% revenue growth for 1QFY18. The outlook factors in
decline in the verticals of Healthcare and Retail. While Healthcare has been
seeing reduced spend on account of uncertainty around the future of the
Affordable Care Act, Retail has been turning sour for most vendors.
Moreover, the company saw three project closures in the Communications
vertical causing a steep decline in 4Q. The situation isn’t expected to materially
improve in the near-term as ramp-ups have been delayed because of a lag in
decision making.
To add to this, the ongoing restructuring in WPRO’s India and Middle East
business would pose as an additional headwind.
The guidance is in constant currency and is based on the average realized rates
during for 4QFY17, at GBP/USD at 1.24, Euro/USD at 1.08, AUD/USD at 0.78,
USD/INR at 66.26 and USD/CAD at 1.33.
During the quarter, growth was led by the verticals of Consumer (2.6% QoQ CC),
Finance Solution (+3.2% QoQ CC) and Manufacturing (+4.7% QoQ CC). Growth
was dragged by Communications (-6.6% QoQ CC) and Healthcare (-2.0% QoQ CC)
In terms of Geographies, India & ME was flattish having grown at 0.5% QoQ CC
APAC declined by 0.7% QoQ CC. Growth was strong in Europe at 4.4% QoQ CC.
In terms of service lines, Application Services (5.5% QoQ) was the strongest, and
BPO saw a decline of 4.8% QoQ.
Contri to
Rev. (%)
26.0
15.8
13.1
26.0
15.4
22.8
CC Growth -
QoQ (%)
-6.6
2.6
1.9
3.2
-2.0
4.7
CC Growth -
YoY (%)
-6.0
1.4
0.7
7.8
20.4
2.8
Segmental analysis
Exhibit 4: ~57% of the portfolio under pressure in the near-term
Verticals
Communications
Consumer Business Unit
Energy, Natural Resources & Utilities
Finance Solutions
Healthcare, Life Sciences and Services
Manufacturing & Technology
Source: Company, MOSL
Exhibit 5: Restructuring the India & Middle East business
Geographies
US
Europe
India & Middle East business
Other emerging markets
Contri to Rev.
(%)
54.9
24.4
9.9
10.8
CC Growth -
QoQ (%)
1.2
4.4
0.5
-0.7
CC Growth -
YoY (%)
8.4
6.2
-7.3
-0.1
Source: Company, MOSL
Capital allocation actions: Bonus shares, Likely buyback
WPRO announced the issue of bonus share in the ratio of 1:1 as on the record
date to be decided, subject to shareholder approval.
At the end of the previous quarter WPRO had declared an interim dividend of
INR2 per share. This has now been recommended to be adopted as the final
dividend for FY17, making it the total dividend paid in the year.
It will now consider a proposal for buyback of shares around July 2017. In July
2017, the company would have completed one year since its previous buyback.
As per regulations, no offer of buyback can be made within a period of one year
from the date of closure of the preceding offer of buyback.
3
25 April 2017

Wipro
Takeaways from Management Commentary
1Q revenue guidance low on several factors:
The company guided for -2% to
0% revenue growth for 4Q. Led by industry uncertainties, WPRO has been
seeing challenges in the verticals of Healthcare and Consumer, causing
expectations of revenue pressure in the next quarter. The ongoing restructuring
in the India and Middle East business is likely to add to this. There will be
incremental revenue from the acquisition of Infoserver (<USD3m quarterly), but
that won’t make a material difference to how the guidance looks.
Profitability too would be impacted:
Profitability is expected to be soft in
1QFY18 because of [1] revenue growth pressures, [2] salary hike, [3] absence of
70bp tailwind seen in 4Q on account of one-off items. Moreover, the company is
not compromising on investments, resulting in proportionate pressure on
margins.
Expect revival 2Q onwards:
With HPS likely to bottom out towards the end of
1QFY18, and the completion of restructuring in India and Middle East, growth is
expected to revive 2Q onwards. By 4QFY18, the company expects to reach
industry-growth rates.
Margin guidance subject to currency stability:
Margins too are expected to
revive QoQ post the downturn in 1QFY18. With this, the company expects
margins to be in a narrow range compared to margins in FY17 (17.9% in IT
services). However, this would be subject to the INR/USD rate remaining at
levels seen in FY17 on average. Any adverse movement from that average would
result in a change in the margin trajectory.
Change in Estimates: Cutting revenue 2.7-3% and earnings 7.6-10.9%
We have cut our forward revenue estimates by 2.7-3.0% and earnings estimates
by 7.6-10.9%, factoring fresh concerns around the verticals of Healthcare and
Consumer in addition to ongoing India restructuring.
We now model USD revenue growth 3.5% in FY18E and 7.6% in FY19E. On the
margin front, we have assumed 50bp decline in IT services EBIT margins in FY18
given the revenue growth pressures. The management has set expectations of
margins being near what they were in FY17; however, that is based on average
currency rates realized in FY17.
Given the strides in Automation through HOLMES, multiple levers in the form of
offshoring, fixed price projects and more importantly revenue growth revival,
we build IT services margin expansion of 60bp in FY19E.
Exhibit 6: Change in estimates
Revised
FY17 FY18E FY19E
68.6
66.5
67.4
7,705 7,977 8,583
4.9
3.5
7.6
16.1
16.2
16.8
17.9
17.2
17.8
33.8
34.6
38.2
FY17
68.2
7,694
4.7
16.1
17.9
33.0
Earlier
FY18E FY19E
67.8
68.7
8,201 8,849
6.6
7.9
16.8
17.6
18.0
18.7
37.5
42.9
Change
FY17 FY18E
0.6% -2.0%
0.1% -2.7%
14bp -304bp
-4bp -65bp
1bp -81bp
2.5% -7.6%
FY19E
-1.8%
-3.0%
-32bp
-82bp
-94bp
-10.9%
INR/USD
USD Revenue - m
Growth (%)
EBIT Margin - Overall (%)
EBIT Margin - IT Services (%)
EPS - INR (IT Serv & Products)
Source: Company, MOSL
25 April 2017
4

Wipro
Valuation and view - No structural turnaround on the anvil just yet
The change in leadership at WPRO has been followed by some tweaks to the
organization structure, while role redundancies and senior exits are a natural
consequence of the process. WPRO to its credit got through with most of those
changes swiftly, to shift focus on execution of the strategy than the distraction
from getting the team in place.
As WPRO’s new leader, Mr. Abid Ali has chalked out an aggressive plan for
WPRO, targeting to reach USD15b revenues with 23% EBIT margin. That implies
revenue CAGR of ~20% over the next four years, and if the margins attain the
300bp expansion, then even higher CAGR for earnings.
That said, given the exit in FY16, performance in FY17, and clouded near-term
outlook, the company remains well short of the run-rate implied in the
aspiration (revenues and operating margins), thereby making the goal post
steeper for the remainder of the period.
Growth underperformance to peers is only a part of WPRO’s problems. What is
also notable is the persistent portfolio mix issue that weighs upon its
performance. While Energy & Utilities has started to stabilize; performance in
Communications, Consumer and Healthcare is being diluted by industry
pressures. These three verticals together constitute to 57% of total revenue,
making it difficult to make a case for an immediate recovery in performance.
Moreover, the company is in the middle of active investment mode where
spending is aimed towards building capabilities, training and incentivizing people,
acquiring businesses, and investing in strategic accounts leading to dilution of
rates and margins. The banking of margin resurrection on medium-term levers like
automation and productivity improvement, especially in the absence of strong
revenue growth will only result in additional pressure on earnings.
Over FY16-19, we expect WPRO to grow its USD revenues at a CAGR of 5.5% and
EPS at a CAGR of 6.2%. While valuations at 14.3/13.0x FY18/19E appear
inexpensive, multiple re-rating will elude as long as portfolio issues drag growth.
Our price target of INR500 discounts FY19E earnings by 13x.
Neutral.
Pick-up in YoY CC growth guidance ex-acquisitions
Broad-basing of growth across verticals
Uptick in margins from automation and productivity initiatives
Prolonged weakness in Healthcare / Consumer vertical
Continued weakness in top accounts
Continued softness in the Americas and Europe
Avg(x)
Key triggers
Key risk factors
Exhibit 7: 1-year forward PE band
25
18
11
4
14.8
PE (x)
Median(x)
Peak(x)
Min(x)
22.6
15.4
Exhibit 8: 1-year forward PB band
6.5
4.5
PB (x)
Median(x)
Peak(x)
Min(x)
5.7
3.1
Avg(x)
13.7
6.0
2.5
0.5
3.1
1.4
2.2
Source: Bloomberg, MOSL
Source: Bloomberg, MOSL
25 April 2017
5

Wipro
Story in charts
Exhibit 9: Growth guidance now in the negative
Midpoint of QoQ CC growth guidance (%)
3.0
3.0
3.0
2.9 3.0
2.7
2.5
2.0
2.0
1.5
1.5
1.0
0.9
0.6
0.5
0.3
Exhibit 10: Resulting in yet another year of under
performance
Revenue (USD m)
18.9
13.4
5.0
6.4
7.0
3.7
4.9
7.6
3.5
Growth (%)
-1.0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 11: While E&U stabilizes, other verticals take a hit
Exhibit 12: Utilization has been inching up
Utilization % (incl. trainees)
Utilization % (excl. trainees)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 13: Visible uptick in investments (indexed at 100)
140
125
110
95
80
S&M (IT Serv)
USD revenues
Exhibit 14: Lever of FPP continues to play…
Revenue proportion fron Fixed price contracts (%)
Source: Company, MOSL
Source: Company, MOSL
25 April 2017
6

Wipro
Operating metrics
Exhibit 15: Operating metrics
4QFY15
Services Composition (%)
IMS
BPO
Product Engg and Mobility
Wipro Analytics
Application Services
Total
R&D
Consulting
Verticals (%)
Global Media & Telecom
Finance Solutions
Manufacturing & Hitech
Healthcare Lifescience
Retail & Transportation
Energy, Natural Resources & Utilities
Communications
Consumer
Manufacturing & Technology
1QFY16
28.0
9.3
7.7
7.5
47.5
100.0
10.3
1.7
2QFY16
28.0
9.8
7.9
7.5
46.8
100.0
10.5
1.9
3QFY16
28.1
9.8
8.0
7.4
46.7
100.0
10.4
1.6
4QFY16
28.9
10.6
8.0
7.2
45.3
100.0
10.3
1.4
1QFY17
27.9
12.9
7.1
7.4
44.7
100.0
-
-
2QFY17
28.2
13.4
7.3
7.3
43.8
100.0
-
-
3QFY17
28.1
13.3
7.2
7.0
44.4
100.0
-
-
4QFY17
28.0
12.3
7.1
6.9
45.7
100.0
-
-
27.9
9.4
7.6
7.1
48.0
100.0
10.2
1.8
13.5
26.5
18.3
11.7
14.5
15.5
26.8
11.2
15.2
7.4
16.2
23.2
52.5
25.6
10.6
11.3
10
17
30
86
151
244
314
537
26.7
11.4
14.7
7.6
16.2
23.4
53.0
25.2
10.6
11.2
10
17
31
85
154
244
321
533
26.2
12.0
14.4
7.7
16.5
23.2
52.8
24.8
11.0
11.4
9
17
32
85
154
247
325
536
25.4
13.3
14.0
7.7
16.4
23.2
52.5
25.6
11.0
10.9
9
18
33
89
160
248
331
550
25.6
15.3
13.2
7.6
15.8
22.5
53.5
25.4
10.4
10.7
9
19
33
91
170
252
336
565
25.5
16.0
12.9
7.5
15.7
22.4
54.8
24.0
10.4
10.8
8
19
33
91
171
258
341
571
25.5
16.0
13.0
7.4
15.8
22.3
55.5
23.6
10.0
10.9
9
17
33
90
170
264
349
576
26.0
15.4
13.1
6.9
15.8
22.8
54.9
24.4
9.9
10.8
9
18
34
91
163
268
354
602
Geography (%)
Americas
Europe
India & Middle East business
APAC and Other Emerging Markets
Customer size distribution (TTM)
> $100M
> $75M
> $50M
> $20M
> $10M
> $5M
> $3M
> $1M
Customer metrics
Revenue from Existing customers %
Number of new customers
Total Number of active customers
Customer Concentration (%)
Top customer
Top 5
Top 10
51.7
26.3
10.7
11.3
11
15
31
86
150
231
311
542
96.7
65
1054
3.8
12.6
20.6
99.6
36
1071
3.3
12.2
20.1
98.5
67
1100
3.1
11.7
19.8
97.9
39
1105
3.2
11.5
19.3
96.5
119
1223
2.7
11.0
18.2
99.7
50
1208
2.5
10.3
17.6
98.6
47
1180
2.6
10.1
17.5
97.6
108
1259
2.8
10.0
16.9
96.0
51
1323
2.9
10.0
16.9
25 April 2017
7

Wipro
Exhibit 16: Operating metrics
4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
4QFY17
EMPLOYEE METRICS
Closing Headcount - IT Services
158,217 161,789 163,396 170,664 172,912 173,863 174,238 174,238 181,482
Sales & Support staff - IT Services (average)
11,629 12,517 13,068 13,239 13,737 14,324 14,543 14,543 14,612
Utilization (IT Services excl. BPO, IFOX and I&ME)
Gross Utilization (%)
70.5
71.3
69.5
66.4
68.1
69.9
71.2
71.6
73.1
Net Utilization (excl support) (%)
78.0
79.4
77.2
73.8
76.1
78.8
80.2
80.0
81.9
Net Utilization (excl trainees) (%)
80.5
81.9
82.3
78.0
77.5
79.7
82.8
81.9
84.8
Attrition
IT Services excluding BPO and I&ME
Voluntary TTM
16.5
16.4
16.4
16.3
16.1
16.5
16.6
16.3
16.3
Voluntary Quarterly Annualized
15.6
16.4
16.8
16.3
14.9
17.9
17.2
15.4
14.8
Involuntary Quarterly Annualized
-
-
-
-
-
-
-
-
-
BPO - Quarterly
13.3
12.0
10.2
9.9
11.1
11.7
12.2
10.7
11.2
BPO - Post training
9.6
9.3
8.5
8.8
9.9
9.0
10.8
8.2
9.0
IT SERVICES (EXCL INFOX, BPO, I&ME)
Service Delivery
Revenue from FPP
55.5
54.5
53.4
55.9
56.9
56.0
56.4
57.7
58.3
% of onsite revenue
53.7
54.6
53.9
53.8
54.2
54.4
53.9
53.5
52.8
% of offshore revenue
46.3
45.4
46.1
46.2
45.8
45.6
46.1
46.5
47.2
IMS
-0.5
1.5
2.1
0.7
5.3
-1.0
0.3
-1.1
2.4
BPO
-2.2
0.0
7.6
0.3
10.7
24.9
3.1
-1.4
-5.0
Product Engg and Mobility
5.8
2.4
4.8
1.6
2.4
-8.9
2.0
-2.1
1.3
Wipro Analytics
0.2
6.8
2.1
-1.0
-0.4
5.4
-2.1
-4.8
1.3
Application Services
-2.6
0.1
0.6
0.1
-0.7
1.2
-2.7
0.7
5.7
R&D
Consulting
Vertical wise
Global Media and Telecom
Finance Solutions
Manufacturing and Hi-Tech
Healthcare, Life Sciences and Services
Retail and Transportation
Energy and Utilities
Communications
Consumer
Manufacturing & Technology
2.4
-3.7
-3.3
1.9
-1.2
-1.2
1.6
-6.6
2.9
-6.4
-1.1
2.2
2.8
-3.2
4.6
-0.9
4.1
14.1
-0.6
-15.5
1.4
-10.4
-
-
-
-
-
-
-
-
1.7
3.9
-1.3
4.9
2.1
3.0
3.1
0.5
2.1
1.2
-4.1
-1.3
4.7
2.5
-1.5
5.6
-1.7
1.7
2.2
-0.5
0.0
-1.2
4.1
2.1
3.6
-3.2
-3.4
1.0
-0.7
13.5
-0.5
2.4
1.8
2.4
1.8
5.7
2.4
-2.1
-13.6
2.4
-5.5
3.8
3.4
18.0
-3.3
1.3
-1.2
-0.5
4.5
1.8
-3.0
0.7
-5.0
-3.6
4.0
3.3
-1.1
3.8
-3.0
-2.1
-1.4
-1.2
1.7
-6.2
-0.8
0.2
3.2
-4.6
0.6
-0.6
-0.7
-0.7
0.1
-2.0
-0.1
-1.1
0.6
-2.4
-4.5
0.2
6.9
-4.7
-7.4
0.0
4.7
-1.1
3.5
-4.2
2.7
5.0
1.6
6.2
1.7
1.8
6.4
1.3
2.7
2.7
Geography wise
US
Europe
India & Middle East business
Other Emerging markets
Client Concentration
Top client
top 2-5 clients
Top 6-10 clients
Non top 10 clients
-0.6
-5.8
10.2
-2.0
-1.2
-2.3
-4.7
-0.7
2.7
-1.6
0.2
1.1
-12.2
2.3
-0.2
1.7
Source: MOSL, Company
25 April 2017
8

Wipro
Financials and Valuations
Key assumption
Y/E Mar
INR/USD Rate
Revenues (USD m)
Offshore Revenue (%)
Total Headcount
Net Addition
Per Capita Productivity (USD)
Gross Utilization (%)
IT Services EBIT Margin (%)
2012
48.0
5,921
46.2
135,920
13,535
43,563
69.0
20.8
2012
318,747
2.5
66,713
20.9
10,129
56,584
0
8,939
0
65,523
12,955
19.8
243
52,325
52,325
-14.2
2012
4,917
280,397
285,314
58,958
0
345,121
113,369
54,381
58,988
0
41,961
262,886
10,662
110,353
77,666
64,205
90,880
90,880
0
172,006
345,121
2013
54.3
6,218
46.4
145,812
9,892
42,643
66.7
20.5
2013
374,256
17.4
77,996
20.8
10,650
67,346
0
11,250
0
78,596
16,912
21.5
322
61,362
61,362
17.3
2013
4,926
278,886
283,812
63,816
0
348,799
115,556
65,031
50,525
0
69,222
263,513
3,263
108,623
87,869
63,758
90,931
90,931
0
172,582
348,799
2014
60.4
6,618
45.9
146,053
241
45,312
66.4
22.6
2014
434,269
16.0
97,099
22.4
11,106
85,993
0
15,012
0
101,005
22,601
22.4
438
77,966
77,966
27.1
2014
4,932
338,567
343,499
51,592
0
396,478
127,586
76,137
51,449
0
60,843
324,654
2,293
124,726
117,862
79,773
105,826
105,826
0
218,828
396,478
2015
62.2
7,082
46.0
158,217
12,164
44,759
68.7
22.0
2015
469,545
8.1
104,609
22.3
12,823
91,786
0
19,897
0
111,683
24,594
22.0
531
86,558
86,558
11.0
2015
4,937
403,045
407,982
78,913
0
488,541
143,166
88,960
54,206
0
57,775
412,043
4,849
133,869
164,017
109,308
111,492
111,492
0
300,551
488,541
2016
66.3
7,346
45.9
172,912
14,695
42,486
68.9
20.5
2016
512,440
9.1
108,119
21.1
14,965
93,154
0
21,565
0
114,719
25,305
22.1
492
88,922
88,922
2.7
2016
4,941
461,137
466,078
125,221
0
593,523
168,877
103,925
64,952
0
137,851
404,286
5,390
150,653
104,724
143,519
131,398
131,398
0
272,888
593,523
2017
68.6
7,705
46.4
181,482
8,570
42,453
71.6
17.9
2017
550,402
7.4
108,789
19.8
20,256
88,533
0
20,254
0
108,787
25,213
23.2
248
83,326
83,326
-6.3
2017
4,861
515,443
520,304
142,412
0
665,107
193,975
124,181
69,794
0
299,133
282,871
3,915
139,941
62,457
76,558
128,409
128,409
0
154,462
665,107
2018E
66.5
7,977
46.5
191,832
10,350
41,586
71.5
17.2
2018E
555,727
1.0
111,964
20.1
22,017
89,947
2019E
67.4
8,583
46.4
206,332
14,500
41,596
71.3
17.8
2019E
606,060
9.1
125,030
20.6
23,405
101,625
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
Income Statement
(INR Million)
0
19,450
0
109,397
25,161
23.0
288
83,947
83,947
0.7
2018E
4,861
561,384
566,245
130,412
0
699,048
246,678
146,198
100,480
0
299,133
291,595
2,742
154,991
679
133,182
133,878
133,878
0
157,717
699,048
0
19,751
0
121,375
28,523
23.5
277
92,575
92,575
10.3
2019E
4,861
610,105
614,966
118,377
0
735,734
283,462
169,602
113,860
0
299,133
324,631
2,991
169,015
13,409
139,216
143,608
143,608
0
181,023
735,734
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
(INR Million)
25 April 2017
9

Wipro
Financials and Valuations
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
Ratios
2012
21.3
25.4
116.5
6.0
28.2
0.0
0.0
0.0
0.0
0.0
0.0
19.9
17.1
0.0
5.7
112
2013
24.9
29.3
115.6
7.0
28.1
0.0
0.0
0.0
0.0
0.0
0.0
21.6
18.9
0.0
7.0
107
2014
31.7
36.2
139.9
8.0
25.3
15.6
13.7
3.5
2.5
11.2
1.6
24.9
22.5
0.0
8.8
98
2015
35.1
40.3
166.1
12.0
34.2
14.1
12.3
3.0
2.3
10.2
2.4
23.0
20.2
0.0
9.3
101
2016
36.1
42.2
189.7
6.0
16.6
13.7
11.7
2.6
2.1
10.2
1.2
20.3
16.7
0.0
9.0
101
2017
33.8
42.0
211.7
2.0
5.8
14.6
11.8
2.3
1.8
9.2
0.4
16.9
13.6
0.0
8.5
96
2018E
34.6
43.7
234.2
13.0
37.6
14.3
11.3
2.1
1.8
9.2
2.6
15.5
12.8
0.0
6.8
97
2019E
38.2
47.8
254.4
15.0
39.3
13.0
10.3
1.9
1.7
8.0
3.0
15.7
13.8
0.0
5.8
98
-0.1
2012
66,713
3,998
-16,462
0
0
54,249
-14,023
40,226
-11,691
0
-25,714
10,663
2,780
0
-25,454
-12,010
16,525
61,141
77,666
-0.1
2013
77,996
2,872
7,501
0
0
88,369
-2,187
86,182
-8,949
0
-11,136
-42,436
4,368
0
-28,962
-67,030
10,203
77,666
87,869
-0.2
2014
97,099
-57
-11,909
0
0
85,133
-12,030
73,103
-5,753
0
-17,783
4,919
-11,324
0
-30,952
-37,357
29,993
87,869
117,862
-0.2
2015
104,609
-24,594
-40,250
0
0
39,765
-15,580
24,185
41,476
0
25,896
0
30,937
0
-50,443
-19,506
46,155
117,862
164,017
0.0
2016
108,119
-7,970
-36,478
0
0
63,671
-25,711
37,960
-124,079
0
-149,790
-12,421
53,336
0
-14,088
26,826
-59,293
164,017
104,724
0.2
2017
108,789
-19,615
79,553
0
0
168,727
-25,098
143,629
-189,532
0
-214,630
-23,087
18,161
0
8,561
3,636
-42,267
104,724
62,457
0.2
2018E
111,964
12,557
-60,950
0
0
63,570
-52,703
10,868
-4,083
0
-56,785
0
-12,000
0
-56,564
-68,564
-61,778
62,457
679
0.2
2019E
125,030
15,053
-9,184
0
0
130,899
-36,785
94,114
-1,392
0
-38,177
0
-12,035
0
-67,957
-79,992
12,730
679
13,409
Cash Flow Statement
(INR Million)
25 April 2017
10

Wipro
Corporate profile
Company description
Exhibit 1: Sensex rebased
Wipro is the third largest Indian IT services
company and the largest third-party BPO operator
in India. It is the largest third-party R&D services
provider globally, employing over 156,000
employees. It offers among the widest range of IT
and ITeS services and its corporate governance and
transparency are at the highest level in the industry.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Mar-17
Promoter
DII
FII
Others
73.3
6.5
10.8
9.5
Dec-16
73.3
6.7
10.3
9.8
Mar-16
73.3
5.3
11.5
9.9
Source: Capitaline
Exhibit 3: Top holders
Holder Name
LIFE INSURANCE CORPORATION OF INDIA
JP Morgan Chase Bank NA
ICICI PRUDENTIAL EQUITY INCOME FUND
FIRST STATE INVESTMENTS ICVC- STEWART
INVESTORS ASIA PACIFIC LEADERS FUND
% Holding
2.5
2.0
1.7
1.3
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Azim H Premji
Abidali Z Neemuchwala
T K Kurien
M Sanaulla Khan
Designation
Chairman & Managing
Director
Executive Director &
CEO
Executive
Vice
Chairman
Company Secretary
Exhibit 5: Directors
Name
Ashok S Ganguly
Jagdish N Sheth
N Vaghul
Patrick J Ennis
William Arthur Owens
Name
Ireena Vittal
M K Sharma
Patrick Dupuis
Vyomesh Joshi
Rishad Azim Premji
*Independent
Source: Capitaline
Exhibit 6: Auditors
Name
BSR & Co LLP
Type
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
FY19
MOSL
forecast
33.8
34.6
38.2
Consensus
forecast
34.5
37.5
39.8
Variation (%)
-2.0
-7.8
-3.9
Source: Bloomberg
Source: Capitaline
25 April 2017
11

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it
and/or its affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an
offer, invitation or inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution
and has been furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into
account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their
particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses
on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate
investors on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of
gathering, applying and interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.
Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and
other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and
investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things,
may give rise to real or potential conflicts of interest. MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the
financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other
related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent
of the views of the affiliates of MOSt even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a
company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon,
etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees
from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or
employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly
available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party
either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or
developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be
regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may
arise to any person from any inadvertent error in the information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any
matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own
investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this
report or for any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any
compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned
in this report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against Motilal Oswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry
and adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have
requested to SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of Motilal Oswal Securities Limited -Click
here to access detailed report
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research
receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Wipro
Disclosure of Interest Statement
Analyst ownership of the stock
No
Served as an officer, director or employee -
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has
an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of
Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation
of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not
conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is
not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States.
Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S.
persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors").
This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors
and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S.
registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and
therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in
the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
WIPRO
25 April 2017
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
Motilal Oswal Securities Ltd
12