X

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: Extra-ordinary performance - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 19, 2001

    Wipro: Extra-ordinary performance

    The net profit figure at Rs 1,888 m for 3QFY01 has jumped 120% compared to the net profit of Rs 840 m in 3QFY00, this is excluding extra ordinary losses of Rs 415 m (this was due to sale of shares of Wipro Finance Ltd.,). Considering the extra ordinary loss the net has jumped up 325% on a YoY basis. On a sequential basis the company’s topline growth was 4% and the bottomline growth was around 22%.

    The highlight of the performance is the jump in operating margins from 24.2% in 2QFY01 to 29.1% in 3QFY01, indicating higher billing rates.

    (Rs m) 2QFY01 3QFY01 Change
    Sales 7,404 7,738 4.5%
    Other Income 153 63 -58.8%
    Expenditure 5,611 5,483 -2.3%
    Operating Profit (EBDIT) 1,793 2,255 25.8%
    Operating Profit Margin (%) 24.2% 29.1%  
    Interest - -114  
    Depreciation 208 264 26.9%
    Profit before Tax 1,738 2,168 24.7%
    Tax 198 280 41.4%
    Profit after Tax/(Loss) 1,540 1,888 22.6%
    Net profit margin (%) 20.8% 24.4%  
    Diluted number of shares 229 231.9  
    Diluted Earnings per share* 26.6 32.6  
    P/E (at current price) 107.4 87.6  
    *(annualised)      

    As expected the contribution of Global IT services business (comprising of R&D services group, Enterprise solutions group, Global support services group) to revenues has gone up to 62% in 3QFY01 from 56% for 1HFY01. The R&D services group contributed 50%. This R&D group is focused on technology solutions. Telecom and Inter-networking practice contributed to 30% of the revenues of the group. This is inline with its vision to become one of the top ten technology companies in the world by 2004.

    The Enterprise solutions group contributed to 45% of the revenues this is down from 51% in 1HFY01. Global support services group contributed the remaining 5%. Wipro is leveraging on its expertise in the technology arena and its experience in support services. These two groups will give Wipro the cutting edge.

    Wipro Infotech contributed 23% to the revenues (29% in 1HFY01). This group too saw an increase in contribution from solutions and service segment. The operating margins for this group expanded from 3.2% in FY00 to 10.8% in 3QFY01. This is due to the spin off of its peripherals business in September 2000, which was a low margin business.

    The Consumer care and Lighting business contributed to 12% of the revenues in 3QFY01 compared to 11% for 1HFY01. Lighting products showed a YoY growth of about 25% and toilet soaps grew at 20% for the nine months ended December 2000.

    The geographic distribution of revenues have not changed significantly only contribution of US has gone down by 1% and this has been offset by a similar increase from Europe.

    The number of new clients added in 3QFY01 was 26, contributing to 10.2% of the revenues for the quarter. The exposure to dot-coms was just 1.5%. Technology product start up companies contributed to 3.5% of the revenues for the quarter. Share of the largest customer was 8% of the revenues this quarter. The figure assumes importance in the light of rumors about Wipro loosing the GE account, which the company claims contributes to only 5% of the revenues. The Global IT division now services about 67 clients. Therefore, it seems Wipro’s client concentration is sufficiently de-risked.

    Compared to our projections Wipro’s topline line growth was very low, but it has beaten our OPM projections with significant improvement in operating margins. Also, it has earned an interest income of Rs 114 m.

    Growth rates
    Particulars 3QE 3Q
    Sales 18.0% 4.5%
    Operating profit 21.8% 25.8%
    Net profit 21.1% 22.6%
    Key Ratios
    Particulars 3QE 3Q
    OPM (excl. Other Inc.) 25.0% 29.10%
    Tax / PBT 10.0% 12.90%
    NPM 21.3% 24.40%

    At the current market price of Rs 2,852 Wipro is trading at a P/E multiple of 110 times its 9 months FY01 annualised earnings. We have to revise our projections on the back of better than expected performance of the company.

     

     

    Equitymaster requests your view! Post a comment on "Wipro: Extra-ordinary performance". 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

    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.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    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

    WIPRO SHARE PRICE


    Aug 21, 2017 (Close)

    TRACK WIPRO

    WIPRO 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE WIPRO WITH

    MARKET STATS