19 July 2016
Results Update | Sector: Technology
Wipro
BSE SENSEX
27,788
S&P CNX
8,529
CMP: INR549
TP: INR570 (+4%)
Neutral
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Near term performance may remain under pressure…
… Amid multi-pronged investments in growth and some restructuring
2Q guidance suggests prolonged recovery:
With revenue growth of 2% QoQ CC, WPRO
met its guidance for 1QFY17. However, the 0-1% QoQ CC guidance for 2Q ruled out
potential of bridging growth gap to peers in the foreseeable future. Continued drag in
the Energy vertical, sluggishness in top accounts and restructuring in the India &
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
WPRO IN
2,462.7
1,352 / 20.3
613 / 509
-5/-14/-1
822
26.7
Middle East business may continue to weigh on overall revenue growth.
Margins under pressure…:
IT Services EBIT margin of 17.8% declined by 190bp QoQ
(marginally below our estimate of 18.1%). Overall EBIT margin was at 16.1%, below our
estimate of 16.7%, led by the fourth consecutive quarter of losses in the Product
business. PAT was INR20.5b, -8.2% QoQ, against our estimate of INR20.7b.
…As investments take priority:
WPRO has been making investments in building
capabilities, people and in strategic accounts, leading to headwinds that are more
pronounced than earlier anticipated. While it intends to make up for the lost margins
through automation and productivity gains, but only over the medium-term. Rate
dilutions and consequent margin pressure are expected to weigh upon margins in the
near-term, in addition to the full impact of wage hikes in 2Q.
Financials & Valuations (INR b)
Y/E Mar
2016 2017E 2018E
Sales
EBITDA
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
EV/EBITDA (x)
512.4
108.1
88.9
36.1
2.9
189.7
20.3
16.7
15.2
11.4
558.8 622.9
112.9 131.6
85.9 98.4
34.9 40.6
-3.5 16.4
200.0 228.3
17.9 18.9
15.0 16.9
15.7 13.5
10.7
8.8
Muted near-term performance will weigh on valuations:
Portfolio issues and lack of
growth in top clients had been leading to subpar organic growth for WPRO. Although
Digital has been picking up for the company, restructuring of the India & Middle East
business will affect near-term growth, and mining efforts too may take some time
before yielding results. Even the margins will be soft till growth contributes, especially
given the elevation of investments. We now expect USD revenue CAGR of 7.3% over
FY16-18 and earnings CAGR of 6.0%. Our target price of INR570 discounts FY18E
earnings by 14x. Maintain Neutral.
(INR Million)
Est.
Var.
1QFY17 (% / bp)
1,926
0.2
2.4
24bp
140,590
-3.3
3.1
-337bp
14.9
-376bp
29.2
-7bp
12.5
58bp
19.9
-36bp
18.5
16.7
-66bp
3,559
36.2
22.7
20bp
20,738
-1.1
-7.2
-99bp
-5.2
-101bp
8.4
174,852
-0.6
77.5
220bp
44.0
158bp
Estimate change
TP change
Rating change
Quarterly Performance (IFRS)
Y/E March
Revenue (USD m)
QoQ (%)
Revenue (INR m)
QoQ (%)
YoY (%)
GPM (%)
SGA (%)
EBITDA Margin (%)
IT Serv. EBIT (%)
EBIT Margin (%)
Other income
ETR (%)
PAT
QoQ (%)
YoY (%)
EPS (INR)
Headcount
Util excl. trainees (%)
Attrition (%)
Offshore rev. (%)
Rev Guidance (USDm)
Fixed Price (%)
E: MOSL Estimates
1Q
1,794
1.1
122,376
0.8
9.9
30.7
12.2
21.3
21.0
18.5
5,286
21.2
21,877
-3.8
4.0
8.9
161,789
81.9
16.4
45.4
1857
54.5
FY16
2Q
3Q
1,832
1,838
2.1
0.3
125,135 128,605
2.3
2.8
7.1
7.2
31.4
29.8
12.4
12.0
21.8
20.8
20.7
20.2
19.0
17.9
5,138
5,715
22.4
21.8
22,354
22,341
2.2
-0.1
7.2
1.9
9.1
9.1
168,396 170,664
82.3
78.0
16.4
16.3
46.1
46.2
1878
1912
53.4
55.9
4Q
1,882
2.4
136,324
6.0
12.3
29.7
12.3
20.6
20.1
17.4
5,426
22.7
22,350
0.0
-1.8
9.1
172,912
77.5
16.1
45.8
1939
56.9
1Q
1,931
2.6
135,992
-0.2
11.1
29.1
13.0
19.5
17.8
16.1
4,848
22.9
20,518
-8.2
-6.2
8.3
173,863
79.7
45.6
FY17
2QE
3QE
1,928
1,958
-0.2
1.5
138,109 140,273
1.6
1.6
10.4
9.1
28.8
28.9
12.2
11.9
20.0
20.4
17.5
18.0
16.6
17.0
5,422
3,733
22.9
22.9
21,793
21,230
6.2
-2.6
-2.5
-5.0
9.0
8.8
173,228 177,113
79.7
79.7
46.1
45.8
FY16
4QE
2,009
2.6
144,390
2.9
5.9
29.2
11.8
20.8
18.5
17.5
3,849
22.9
22,332
5.2
-0.1
9.2
181,998
79.7
45.6
7,346
3.7
512,440
9.1
30.4
12.2
21.1
20.5
18.2
21,565
22.1
88,922
2.7
36.1
172,912
74.9
45.9
FY17E
7,825
6.5
558,764
9.0
29.0
12.2
20.2
17.9
16.8
17,852
22.9
85,872
-3.4
34.9
181,998
76.4
45.8
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
1QFY17:
CC revenue growth in line, and at midpoint of guided band
Wipro’ 1QFY17 IT Services revenues at USD1,931m grew 2.6% QoQ v/s est. of
2.4% QoQ. CC revenue growth was 2% QoQ, in line with our estimate of 2.1%
QoQ CC.
In Rupee terms, overall revenues were INR136b, -0.2% QoQ, compared to our
estimate of INR140.6b, +3.1% QoQ.
The decline in the Products business was more intense than anticipated. Product
revenue came in at INR4.9b versus our expectation of INR10.6b. Hence,
although IT services revenue was largely in line, overall revenue was missed by
~3%.
Exhibit 1: Revenue growth of 2% QoQ CC in line with guidance of 1-3%
IT Services (USD m)
2.7
0.2
2.9
2.5
1.2
1.8
1.3
-1.2
QoQ Growth (%)
1.1
2.1
0.3
2.4
2.6
Source: Company, MOSL
Overall EBIT margin was 16.1%, -130bp QoQ, below our estimate of 16.7%. The
miss was largely on account of operating losses in the hardware business to the
tune of INR368m (-6.3% EBIT margin). This marks the fourth consecutive quarter
of losses in the product business.
IT Services EBIT was 17.8%, -190bp QoQ, marginally below our estimate of
18.1%.
The margin miss resulted despite an increase of 180bp QoQ in utilization of
employees including and excluding trainees. During the quarter, utilization
(excluding trainees) increased to 79.7% from 77.5% in 4Q.
Margin headwinds during the quarter were: [1] One month impact of wage
inflation, [2] Dilution resulting out of the full integration of HPS, [3] Amortization
of intangibles as per IND-AS, [4] Headwinds in the India and Middle East
business and [5] Investments in customer relationships at strategic accounts.
19 July 2016
2

Wipro
Exhibit 2: IT Services EBIT margin decline largely led by wage
hike and HPS integration
IT Services EBIT margin (%)
IT Services SGA as % of Sales
Exhibit 3: Utilization improved by 180bp during the quarter,
both including and excluding trainees
Utilization % (incl. trainees)
Utilization % (excl. trainees)
Source: Company, MOSL
Source: Company, MOSL
PAT for the quarter was INR20.5b, -8.2% QoQ, compared to our estimate of
INR20.7b, -7.2%.
Organic growth guidance of 0-1% QoQ fails to enthuse
For 2QFY17, WPRO guided for revenues between USD1,931m-1,950m, 0-1%
QoQ in constant currency. This implies YoY growth of 9.5-10.6% in CC, including
contribution from acquisitions. The weaker revenue growth outlook is
contributed in part by likelihood of weak discretionary spending, and secondly,
restructuring of the India & Middle East business.
Given that full integration of HPS happened in 1QFY17, the sequential guidance
is organic. The company mentioned that due to inordinate delays in completion
of closing conditions that exceeded the target closing date and expiration date
under the terms of the agreement, the Viteos acquisition has been called off by
both parties.
The guidance is in constant currency and is based on the average realized rates
during for 1QFY17, at GBP/USD at 1.46, Euro/USD at 1.13, AUD/USD at 0.74,
USD/INR at 67.12 and USD/CAD at 1.29.
In-line revenue driven by lopsided segmental performance
In constant currency Wipro saw flat revenues in Communications (-0.4% QoQ).
There was a decline seen in the verticals of Consumer (-1.6% QoQ CC), Energy,
Natural Resource & Utilities (-4.1% QoQ CC) and Manufacturing and Technology
(-0.9% QoQ CC).
Effectively growth was driven by Finance Solutions (+2.9% QoQ CC) and
Healthcare, Life Sciences & Services (+17.7% QoQ CC). The growth in HLS can be
attributed to the full integration of HPS.
19 July 2016
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Wipro
Exhibit 4: Weakness in all verticals other than Finance Solutions and Healthcare
Verticals
Communications
Consumer Business Unit
Energy, Natural Resources & Utilities
Finance Solutions
Healthcare, Life Sciences and Services
Manufacturing & Technology
Contri to
Rev. (%)
7.6
15.8
13.2
25.6
15.3
22.5
CC Growth
- QoQ (%)
-0.4
-1.6
-4.1
2.9
17.7
-0.9
CC Growth
- YoY (%)
14.6
6.9
-2.8
5.5
46.6
4.6
Source: Company, MOSL
Among geographies, in CC terms, growth was led by Americas (+4.2% QoQ).
While Europe (+0.5% QoQ CC) and APAC and Other Emerging Markets (-0.4%
QoQ CC) were flattish, the India & Middle East business declined by 2.6% QoQ
CC.
Exhibit 5: India and Middle East under pressure
Geographies
US
Europe
India & Middle East business
Other emerging markets
Contri to
Rev. (%)
53.5
25.4
10.4
10.7
CC Growth
- QoQ (%)
4.2
0.5
-2.6
-0.4
CC Growth
- YoY (%)
10.1
10.2
8.7
6.0
Source: Company, MOSL
Update on the 6 themes that define strategic direction
CEO Abid Ali Neemuchwala, in the previous quarter had presented six themes that
represent the strategic play for WPRO going ahead, in order to reach its ambition of
USD15b revenue at 23% operating margin by 2020. The organization and leadership
have been structured to emphasize focus on these areas.
[1] Digital:
Digital comprises of 17.9% of total revenue for WPRO and comprises of
advisory, design, engineering and the services of SMAC and cybersecurity.
WPRO brings differentiated value to customers through the integration of
advisory, design and technology. It won 7 deals across sectors and geographies,
including that with a top 10 European bank with scope across their digital
portfolio. While it trained 10,000 employees in Digital in FY16; it plans to train
an additional 20,000 people in Digital in FY17. In 1QFY17, it trained 800 people
in Digital, and additionally 750 sales personnel to sell Digital to customers.
[2] Client mining:
To augment mining, WPRO has introduced design for delivery
managers that will cover 1,000 delivery managers by the end of the year. With
respect to this initiative, it has already trained 200 delivery managers.
[3] Markets:
WPRO has been increasingly focusing on localization. During the
quarter, it expanded its presence in Mountain View and Atlanta, and is opening
a new centre in Dallas. In Continental Europe, it integrated its offerings with
Cellent and to boost presence in emerging geographies, opened centres in
Ireland and Mexico.
[4] Non linearity:
To increase the non-linear component in WPRO’s revenues, it will
invest in IP, in the form of products, platforms, frameworks and solutions.
HOMES has seen strong adoption so far with 35 engagements across segments.
This compares well with 18 projects at the end of FY16.
19 July 2016
4

Wipro
[5] Hyper-automation:
WPRO deployed 500 cases of bots across 50 of its existing
customers. This enabled the freeing up of 1,100 people. In FY16, 4,500 people
were released because of automation.
[6] Leveraging the partner ecosystem:
The partner ecosystem has been a key
enabler to building capability and scale in Digital and in areas of strategic
importance. M&A, alliances and partnerships will continue. All the acquisitions
made so far have delivered well in terms of synergy. A good example of it was
the cross-selling of HPS to a large existing healthcare client of WPRO.
Takeaways from Management Commentary
Demand environment:
Demand environment has been stable. Although client
spend is increasing minimally, the velocity of shift in budgets from ‘Run’ to
‘Change’ has been rapid. WPRO sees no immediate impact of the Brexit other
than currency movements. However, there is potential for some delays in
discretionary spend in European financial services.
Vertical-wise commentary:
Finance Solutions saw good growth in 1QFY17.
Going forward, the company sees headwinds in the Technology vertical – in the
areas of semiconductor and network manufacturers. Energy too is expected to
remain under pressure till there is stability in oil prices. The environment seems
healthy in Healthcare and Lifesciences, especially with the integration of recent
acquisitions.
Energy continues to drag on overall performance:
In 1QFY17, revenue from the
Energy vertical declined by 4% QoQ CC. The pressure is expected to continue till
there is stability in oil prices, post which customers are expected to resume their
discretionary spend. Given the fact that WPRO’s presence in Energy is higher
towards the discretionary side of spend, the impact of volatile oil prices has
been grave to a larger extent.
Some restructuring in India and Middle East coming up:
The company is
currently in the process of restructuring its India and Middle East business.
While this negatively impacted 1QFY17 revenue, the headwind is likely to
continue for a couple of quarters. This is also reflected in WPRO’s tepid
guidance for 2QFY17.
Investments to keep margins under check:
In the short term, WPRO is expected
to make investments in the business in its 6 strategic areas. This is expected to
weigh upon margins, like it did in 1QFY17. Investments are aimed towards
building capabilities, training and incentivizing people, acquiring businesses and
investing in strategic accounts resulting in dilution on rates and hence margins.
Margin trajectory to inch back up in the mid-term:
While 1QFY17 was impacted
by wage hikes for one month, the full impact is expected to create headwinds in
2QFY17. A substantial portion of this is expected to be offset by productivity
improvement. While margin expansion will remain capped in the near term
because of investments, the company is confident of inching it back up in the
medium term by using the levers of pyramid rationalization, offshoring, and
fixed price contracts.
19 July 2016
5

Wipro
Cutting estimates factoring weak 2Q guidance and likely margin pressure
Although the company met its 1Q revenue guidance, 0-1% QoQ CC revenue
growth guidance for 2Q failed to enthuse. This compares with our earlier
expectation of 3.4% QoQ growth in 2Q.
While constant currency guidance assumes an exchange rate of 1.46 GBP/USD,
current rate of 1.31 GBP/USD implies a further 100bp pressure on USD revenue
growth.
Factoring for the lower revenue growth expectation in 2QFY17, cross-currency
impact, restructuring efforts in the India and Middle East business, and the
cancellation of the acquisition of Viteos, we have cut our revenue estimates by
2.7/4.3% for FY17/18E. We now expect revenue growth of 6.5/8.2% YoY in
FY17/18E.
With additional pressure on margins due to losses in the product business,
greater impact of wage hike in 2Q, lack of material revival in organic revenue
growth, and continued investments in the business, we have cut our overall EBIT
margin estimates for FY17/18 by 130/110bp. We now expect a decline of 150bp
in FY17 EBIT margins and an expansion of 50bp in FY18E.
Consequently, our earnings have been cut by 7.8/8.2% for FY17/18E.
Exhibit 6: Change in estimates
Revised
FY16 FY17E FY18E
7,346 7,825 8,463
USD Revenue - m
3.7
6.5
8.2
Growth (%)
18.2 16.8 17.8
EBIT Margin - Overall (%)
20.5 17.9 18.5
EBIT Margin - IT Services (%)
EPS - INR (IT Serv & Products) 36.1 34.9 40.6
FY16
7,346
3.7
18.2
20.5
36.1
Earlier
FY17E
8,042
9.5
18.1
19.9
37.8
FY18E
8,842
9.9
18.9
20.6
44.2
Change
FY16 FY17E FY18E
0.0% -2.7% -4.3%
0bp -295bp -179bp
0bp -126bp -111bp
0bp -195bp -211bp
0.0% -7.8% -8.2%
Source: Company, MOSL
Valuation and view - No structural turnaround on the anvil just yet
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 1QFY17, guidance for 2QFY17
and commentary on margins, we continue to await for any evidence towards
that end (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 that the single digit CC organic growth is lopsided in favor of India
/ Middle East (+20.7% YoY CC in FY16) and APAC (+11% YoY CC), whereas
Americas grew 8.5% and Europe was flat. Lest that is addressed, even the
margins will be at risk. Among verticals Retail / CPG and Healthcare have held
fort, while other segments continue to struggle to get past single digits.
WPRO is entering in an investment mode where spending is aimed towards
building capabilities, training and incentivizing people, acquiring businesses, and
investing in strategic accounts, all of which mean near term margin pressure.
The bets of margin resurrection is on medium-term levers like automation and
19 July 2016
6

Wipro
productivity improvement, which is a tough ask especially in the absence of
strong revenue growth.
WPRO trades at 16.0x FY17E and 13.8x FY18E EPS. WPRO’s valuation discount to
peers like TCS and INFO suggests attractive upside potential in the event of
growth revival. However, the growth gap is not seen converging in the
foreseeable future in organic terms, which will keep the multiple in check. Our
target price of INR570 discounts forward EPS by 14x. Maintain Neutral.
Key triggers
Significant uptick in YoY CC growth guidance beyond 2QFY17
Broad-basing of growth across verticals
Uptick in margins from automation and productivity initiatives
Key risk factors
Prolonged weakness in Energy & Utilities / Manufacturing vertical
Continued weakness in top accounts
Continued softness in the Americas and Europe
Exhibit 8: 1-year forward PB band
Avg(x)
Min(x)
7.5
6.5
5.5
4.5
3.5
2.5
1.5
0.5
PB (x)
Peak(x)
Avg(x)
6.4
3.4
1.4
2.7
Min(x)
Exhibit 7: 1-year forward PE band
32
25
18
11
4
6.0
PE (x)
Peak(x)
25.1
15.4
14.4
Source: Company, MOSL
Source: Company, MOSL
Exhibit 9: Comparative Valuation
Company
Mkt cap
(USD b)
TCS
Infosys
Wipro
HCL Tech
TECHM
Cognizant
71.7
36.6
19.9
15.2
7.4
35.5
Neutral
Buy
Neutral
Buy
Neutral
Not Rated
2,650
1,320
570
900
550
Rating
TP (INR) Upside
(%)
7.5
21.4
3.8
23.3
8.3
EPS (INR)
P/E (x)
RoE (%)
FY16-18E CAGR
(%)
32.7
24.1
18.9
24.6
18.6
16.5
10.8
11.2
7.3
11.7
10.6
11.8
11.5
11.3
6.0
6.7
10.3
10.1
FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E USD rev. EPS
123.2 134.0 153.1
59.0
36.1
40.1
35.1
2.7
62.8
34.9
54.9
36.4
2.9
73.2
40.6
60.9
42.7
3.2
20.0
18.4
15.2
18.2
14.5
21.9
18.4
17.3
15.7
13.3
13.9
20.0
16.1
14.9
13.5
12.0
11.9
18.0
37.1
24.7
20.3
21.5
23.4
19.1
33.6
23.2
17.9
25.7
20.9
17.6
Source: Company, MOSL
19 July 2016
7

Wipro
Story in charts
Exhibit 10: Growth guidance not picking up materially…
Midpoint of QoQ CC growth guidance (%)
3.0
2.7
3.0
2.9 3.0
2.0
0.6
0.9
0.3
2.5
1.5
3.0
2.0
0.5
18.9
13.4
6.4
7.0
3.7
6.5
8.2
Exhibit 11: …limiting confidence of growth closer to industry
average
Revenue (USD m)
Growth (%)
5.0
5,221 5,921 6,218 6,618 7,082 7,346 7,825 8,463
FY11
Source: Company, MOSL
FY12
FY13
FY14
FY15
FY16 FY17E FY18E
Source: Company, MOSL
Exhibit 12: E&U continues to weigh upon performance
Revenue from E&U (USDm)
17.4
10.8
13.5 14.2
10.3
15.5
9.0
(1.3) (2.1)
269 265
Growth (YoY, %)
Exhibit 13: Margin pressure despite utilization uptick
Utilization % (incl. trainees)
Utilization % (excl. trainees)
(4.2)
(6.5)
(9.5)(10.1)
253 258 270 279 278 298 294 275 273
263 255
Source: Company, MOSL
Source: Company, MOSL
Exhibit 14: Visible uptick in investments (indexed at 100)
140
130
120
110
100
90
80
S&M (IT Serv)
USD revenues
Exhibit 15: Lever of FPP continues to play…
Revenue proportion fron Fixed price contracts (%)
Source: Company, MOSL
Source: Company, MOSL
19 July 2016
8

Wipro
Exhibit 16: Operating metrics
1QFY15
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
2QFY15
27.2
9.2
7.0
7.2
49.4
100.0
9.7
2.0
13.9
26.0
18.2
11.2
13.9
16.8
3QFY15
27.7
9.5
7.1
7.0
48.7
100.0
9.8
1.9
13.8
25.7
18.3
11.7
14.1
16.4
4QFY15
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
1QFY16
28.0
9.3
7.7
7.5
47.5
100.0
10.3
1.7
2QFY16 3QFY16 4QFY16 1QFY17
28.0
9.8
7.9
7.5
46.8
100.0
10.5
1.9
28.1
9.8
8.0
7.4
46.7
100.0
10.4
1.6
28.9
10.6
8.0
7.2
45.3
100.0
10.3
1.4
27.9
12.9
7.1
7.4
44.7
100.0
-
-
25.5
9.7
6.9
7.1
50.8
100.0
9.5
2.0
14.3
26.7
18.2
10.8
14.0
16.0
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
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
49.8
29.6
9.1
11.5
10
14
29
84
143
224
293
511
51.0
27.8
9.2
12.0
10
15
30
85
150
225
292
524
51.4
27.6
9.6
11.4
10
16
31
84
153
226
300
526
51.7
26.3
10.7
11.3
11
15
31
86
150
231
311
542
99.6
35
1022
3.7
13.4
21.8
98.6
50
1018
3.5
12.9
21.5
97.7
44
1018
3.8
12.7
21.0
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
Source: MOSL, Company
19 July 2016
9

Wipro
Exhibit 17: Operating metrics
1QFY15
EMPLOYEE METRICS
Closing Headcount - IT Services
147,452
Sales & Support staff - IT Services (average)
11,174
Utilization (IT Services excl. BPO, IFOX and I&ME)
Gross Utilization (%)
68.7
Net Utilization (excl support) (%)
76.0
Net Utilization (excl trainees) (%)
77.9
Attrition
IT Services excluding BPO and I&ME
Voluntary TTM
16.1
Voluntary Quarterly Annualized
17.0
Involuntary Quarterly Annualized
-
BPO - Quarterly
11.8
BPO - Post training
10.1
IT SERVICES (EXCL INFOX, BPO, I&ME)
Service Delivery
Revenue from FPP
52.1
% of onsite revenue
54.3
% of offshore revenue
45.7
IMS
3.2
BPO
3.3
Product Engg and Mobility
-8.2
Wipro Analytics
0.0
Application Services
0.0
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
2QFY15
154,297
11,328
70.0
77.5
79.4
3QFY15
156,866
11,603
68.5
75.9
78.8
4QFY15
158,217
11,629
70.5
78.0
80.5
1QFY16
161,789
12,517
71.3
79.4
81.9
2QFY16
163,396
13,068
69.5
77.2
82.3
3QFY16
170,664
13,239
66.4
73.8
78.0
4QFY16
172,912
13,737
68.1
76.1
77.5
1QFY17
173,863
14,324
69.9
78.8
79.7
16.5
16.9
-
12.0
10.0
16.5
16.4
-
13.1
9.1
16.5
15.6
-
13.3
9.6
16.4
16.4
-
12.0
9.3
16.4
16.8
-
10.2
8.5
16.3
16.3
-
9.9
8.8
16.1
14.9
-
11.1
9.9
16.5
17.9
-
11.7
9.0
53.1
53.7
46.3
8.6
-3.4
3.3
3.2
-1.0
-1.9
-8.0
-1.0
-0.9
1.8
5.6
1.1
6.9
55.1
54.3
45.7
3.2
4.7
2.8
-1.5
-0.1
3.9
1.8
0.6
0.2
1.9
5.9
2.8
-1.1
55.5
53.7
46.3
-0.5
-2.2
5.8
0.2
-2.6
2.4
-3.7
-3.3
1.9
-1.2
-1.2
1.6
-6.6
54.5
54.6
45.4
1.5
0.0
2.4
6.8
0.1
2.9
-6.4
-1.1
2.2
2.8
-3.2
4.6
-0.9
53.4
53.9
46.1
2.1
7.6
4.8
2.1
0.6
4.1
14.1
55.9
53.8
46.2
0.7
0.3
1.6
-1.0
0.1
-0.6
-15.5
56.9
54.2
45.8
5.3
10.7
2.4
-0.4
-0.7
1.4
-10.4
56.0
54.4
45.6
-1.0
24.9
-8.9
5.4
1.2
-
-
-0.6
-6.1
4.1
0.8
2.3
3.1
-2.3
-0.1
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
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
0.8
-0.2
4.6
3.9
1.2
-3.8
-2.3
2.2
4.3
-4.4
2.9
6.2
-3.7
-1.3
4.2
2.2
2.1
0.6
5.8
-3.7
10.0
-4.0
-2.2
2.0
-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
19 July 2016
10

Wipro
Financials and Valuations
Income Statement
Y/E March
Sales
Change (%)
Operating Costs
SG&A
EBITDA
% of Net Sales
Depreciation & Amort.
EBIT
Margins
Other Income
Income from Eq. Inv.
PBT
Tax
Rate (%)
PAT
Minority Interest
Net Income
Change (%)
2010
271,242
5.6
179,373
32,822
66,581
24.5
7,534
59,047
21.8
3,369
530
62,946
9,293
14.8
53,653
-184
53,469
17.2
2011
310,986
14.7
204,639
40,467
74,091
23.8
8,211
65,880
21.2
4,718
648
71,246
9,896
13.9
61,350
-345
61,187
14.4
2012
318,747
2.5
215,665
36,369
66,713
20.9
10,129
56,584
17.8
8,939
0
65,523
12,955
19.8
52,568
-243
52,325
-14.5
2013
374,256
17.4
250,015
46,245
77,996
20.8
10,650
67,346
18.0
11,250
0
78,596
16,912
21.5
61,684
-322
61,362
17.3
2014
434,269
16.0
284,383
52,787
97,099
22.4
11,106
85,993
19.8
15,012
0
101,005
22,601
22.4
78,404
-438
77,966
27.1
2015
469,545
8.1
308,460
56,476
104,609
22.3
12,823
91,786
19.5
19,897
0
111,683
24,594
22.0
87,089
-531
86,558
11.0
2016
512,440
9.1
341,759
62,562
108,119
21.1
14,965
93,154
18.2
21,565
0
114,719
25,305
22.1
89,414
-492
88,922
2.7
2017E
558,764
9.0
377,635
68,253
112,876
20.2
18,955
93,921
16.8
17,852
0
111,774
25,618
22.9
86,156
-284
85,872
-3.4
(INR Million)
2018E
622,920
11.5
418,989
72,346
131,585
21.1
20,507
111,078
17.8
16,893
0
127,970
29,330
22.9
98,640
-284
98,356
14.5
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest & others
Loans
Capital Employed
Gross Block
Less : Depreciation
Net Block
Investments
Intangible Assets
Other non current assets
Curr. Assets
Debtors
Inventories
Cash & Bank Balance
Adv., Other Current Assets
Current Liab. & Prov
Net Current Assets
Application of Funds
E: MOSL Estimates
2010
2,936
193,176
196,112
8,339
62,511
266,962
89,499
36,041
53,458
30,420
57,813
13,143
175,094
67,636
7,926
64,878
34,654
62,966
112,128
266,962
2011
4,908
234,772
239,680
13,710
52,802
306,192
99,346
44,252
55,094
49,282
58,369
22,682
186,016
85,776
9,707
61,141
29,392
65,251
120,765
306,192
2012
4,917
280,397
285,314
10,492
58,958
354,764
113,369
54,381
58,988
41,961
72,166
27,897
234,989
110,353
10,662
77,666
36,308
81,237
153,752
354,764
2013
4,926
278,886
283,812
10,324
63,816
357,952
115,556
65,031
50,525
69,222
56,470
25,281
238,232
108,623
3,263
87,869
38,477
81,778
156,454
357,952
2014
4,932
338,567
343,499
11,440
51,592
406,531
127,586
76,137
51,449
60,843
65,358
30,525
294,129
124,726
2,293
117,862
49,248
95,773
198,356
406,531
2015
4,937
403,045
407,982
15,315
78,913
502,210
143,166
88,960
54,206
57,775
76,009
29,459
382,584
133,869
4,849
164,017
79,849
97,823
284,761
502,210
2016
4,941
461,137
466,078
22,921
125,221
614,220
168,877
103,925
64,952
137,851
117,832
31,639
372,647
150,653
5,390
104,724
111,880
110,701
261,946
614,220
2017E
4,861
486,721
491,582
22,202
120,238
634,022
209,980
122,880
87,100
177,656
118,845
38,443
324,190
155,907
2,757
82,611
82,915
112,212
211,978
634,022
(INR Million)
2018E
4,861
547,077
551,938
22,202
108,253
682,393
243,867
143,387
100,480
177,656
118,845
40,273
370,005
173,731
3,074
104,181
89,018
124,865
245,139
682,393
19 July 2016
11

Wipro
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Book Value
DPS
Payout %
Valuation (x)
P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity Ratio(x)
2010
18.8
80.7
2.4
12.8
2011
21.6
98.2
4.4
20.3
2012
21.3
116.5
6.0
28.2
2013
24.9
115.6
7.0
28.1
2014
31.7
139.9
8.0
25.3
2015
35.1
166.1
12.0
34.2
2016
36.1
189.7
6.0
16.6
2017E
34.9
200.0
12.8
36.7
2018E
40.6
228.3
13.0
32.0
17.3
12.6
2.8
3.9
1.5
15.6
11.5
2.6
3.3
2.2
15.2
11.4
2.4
2.9
1.1
15.7
10.7
2.2
2.7
2.3
13.5
8.8
1.9
2.4
2.4
31.2
24.8
28.0
23.0
19.9
17.1
21.6
18.9
24.9
22.5
23.0
20.2
20.3
16.7
17.9
15.0
18.9
16.9
88
5.3
90
5.8
112
5.7
107
7.0
98
8.8
101
9.3
101
9.0
100
7.6
97
6.8
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.3
0.2
Cash Flow Statement
Y/E March
CF from Operations
Cash for Wkg. Capital
Net Operating CF
Net Purchase of FA
Net Pur. of Investments
Net Cash from Invest.
Issue of Shares/Other adj
Proceeds from LTB/STB
Dividend Payments
Net CF from Finan.
Free Cash Flow
Net Cash Flow
Opening Cash Bal.
Add: Net Cash
Closing Cash Bal.
E: MOSL Estimates
2010
53,172
-25,743
27,429
-11,198
-12,742
-23,940
24,047
8,742
-13,678
19,111
16,231
22,600
42,278
22,600
64,878
2011
68,827
-12,374
56,453
-9,847
-28,775
-38,622
3,386
-4,592
-25,079
-21,568
46,606
-3,737
64,878
-3,737
61,141
2012
70,711
-16,462
54,249
-14,023
-11,691
-25,714
10,663
2,780
-34,393
-12,010
40,226
16,525
61,141
16,525
77,666
2013
80,868
7,501
88,369
-2,187
-8,949
-11,136
-42,436
4,368
-40,212
-67,030
86,182
10,203
77,666
10,203
87,869
2014
97,042
-11,909
85,133
-12,030
-5,753
-17,783
4,919
-11,324
-45,964
-37,357
73,103
29,993
87,869
29,993
117,862
2015
80,015
-40,250
39,765
-15,580
41,476
25,896
0
30,937
-70,340
-19,506
24,185
46,155
117,862
46,155
164,017
2016
100,149
-36,478
63,671
-25,711
-124,079
-149,790
-12,421
53,336
-35,653
26,826
37,960
-59,293
164,017
-59,293
104,724
2017E
124,974
27,855
152,829
-41,103
-47,622
-88,724
-22,274
-5,796
-76,000
-86,218
111,726
-22,113
104,724
-22,113
82,611
(INR Million)
2018E
139,971
-11,591
128,380
-33,887
-1,830
-35,717
0
-11,985
-76,000
-71,092
94,493
21,571
82,611
21,571
104,181
19 July 2016
12

Wipro
Corporate profile
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.
Company description
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Mar-16
73.3
5.3
11.5
9.9
Dec-15
73.4
4.4
11.8
10.5
Mar-15
73.4
4.4
12.7
9.6
Exhibit 3: Top holders
Holder Name
LIC of India
JP Morgan Chase Bank, NA
% Holding
2.2
2.0
Note: FII Includes depository receipts
Source: Capitaline
Source: Capitaline
Exhibit 4: Top management
Name
Azim H Premji
T K Kurien
Suresh C Senapaty
M Sanaulla Khan
Designation
Chairman
&
Managing
Director
Executive Director & CEO
Executive Director & CFO
Company Secretary
Exhibit 5: Directors
Name
Ashok S Ganguly
Henning Kagermann
M K Sharma
Shyam Saran
William Arthur Owens
Jagdish N Sheth
Name
B C Prabhakar
Ireena Vittal
Narayanan Vaghul
Vyomesh Joshi
Rishad Azim Premji
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
BSR & Co LLP
Type
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
34.9
40.6
Consensus
forecast
38.3
42.4
Variation (%)
-9.0
-4.2
Source: Bloomberg
Source: Capitaline
19 July 2016
13

PRODUCT GALLERY
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Wipro
NOTES
19 July 2016
15

Disclosures
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Wipro
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19 July 2016
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
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