Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Wipro: On the fast track - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jan 16, 2001

    Wipro: On the fast track

    Vivek Paul means business and lots of it. His vision is to make Wipro one of the top ten technology companies in the world. The goal it has set for itself is to be of the size of US $ 4 bn by 2004. Of this $ 2.3 bn will come from the organic growth and the rest ($ 1.7 bn) will come through acquisitions.

    This quarter 3QFY01 saw Wipro’s listing on the NYSE. After listing Wipro’s stock is performing much better in the markets than its Indian counterparts. But this could be due to support by the underwriters, which lasts for about six to eight weeks after listing. Effectively since mid December the stock has been performing well without underwriter’s support.

    Growth rates
    Particulars FY00 FY01
      1Q 2Q 3Q 4Q 1Q 2Q 3QE
    Sales -27.5% 35.3% 1.0% 30.0% -16.5% 19.7% 18.0%
    Operating profit -37.5% 52.2% 8.9% 39.0% -10.8% 32.8% 21.8%
    Net profit -39.0% 51.5% 18.0% 16.2% 10.3% 43.0% 21.1%

    We have projected a growth of 18% in revenues for the quarter ended December 2000. The contribution of the global IT services business (that accounts for 56% in 2QFY01) is expected to show an increase. This will also push the operating margin to a higher side (our conservative estimate is of 25%). The contribution of Global IT services division (operating margins 33%) will be the deciding factor. The enterprise solutions division of the Global IT services group could show strong growth. This group contributed to 51% of the software revenues in 2QFY01. 30% of its business comes from e-commerce. The advantage that this group has is that it can offer end-to-end solutions from consulting to implementation. Another advantage this group has is its systems integration capabilities that has become a pressing need for many brick and mortar companies that want a presence on the internet. The other income figure may push up the net margins. This is will be due to the interest earnings on Rs 5 bn raised through the ADR issue in October and the money is yet to be utilized.

    Particulars FY00 FY01
      1Q 2Q 3Q 4Q 1Q 2Q 3QE
    OPM (excl. Other Inc.) 15.7% 17.7% 19.1% 20.4% 21.8% 24.2% 25.0%
    Tax / PBT 4.7% 5.9% 10.7% 25.3% 9.9% 11.4% 10.0%
    NPM 11.3% 12.6% 14.7% 13.2% 17.4% 20.8% 21.3%
    Cash FDEPS (Rs) 3 4 4 5 5 8 9
    FDEPS (Rs) 2 3 4 4 5 7 8
    P/E (x) FY01E             103

    It will be very interesting to see Wipro’s geographic distribution. Wipro has a lower contribution to its revenues from United States (65%) compared to the other software majors. The figure could go down further. In 2QFY01 the contribution of US came down to 65% from 70% in FY00. This was offset by the increase in contributions from Europe and Japan. Movement in billing rates would be the other topic of keen interest.

    The December quarter was also plagued by rumors that Wipro had lost GE’s account. This account now contributes 5% of the software revenues. This figure has come down from about 15% two years ago. One of the possible causes is that Wipro had reduced the business on account of lower billing rates. Even if it is so the effect will be felt only after FY01. Therefore, we can expect a repeat performance like the last quarter. Chances are if there is a surprise it will be pleasant one.



    Equitymaster requests your view! Post a comment on "Wipro: On the fast track". Click here!


    More Views on News

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Wipro: A Good Performance (Quarterly Results Update - Detailed)

    May 4, 2017

    Acquisitions and digital services aid growth.

    Wipro: Another Flat Quarter (Quarterly Results Update - Detailed)

    Feb 9, 2017

    Wipro has reported a 1% QoQ decrease in the consolidated topline and a 1.9% QoQ increase in the consolidated bottomline for the quarter ended December 2016.

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)



    Compare Company With Charts