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Wipro: A Decent Start to the Year - Views on News from Equitymaster
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Wipro: A Decent Start to the Year
Jul 27, 2017

Wipro has announced its results for the first quarter of FY18. The company has reported a 2.6% QoQ decrease in sales while the net profit was down 8.2% QoQ.

Performance summary
  • Consolidated sales decreased by 2.6% QoQ during the quarter. IT services revenues were down 2.8% QoQ in rupee terms but were up 0.3% QoQ in constant currency terms, and up 0.9% QoQ in US dollar terms.
  • The operating margin was down sequentially to 19.6%. On an absolute basis, the operating profit decreased by 5.2% QoQ. This was in part due to adverse currency movements.
  • The net profit was down sequentially by 8.2% QoQ. The net margin came in at 15.2%.
  • The company completed a 1:1 bonus issue in the quarter.
  • The company announced a buyback of shares amounting to 110 billion. Please see our view on the same below.

    Consolidated Financials
    4QFY17 1QFY18 Change
    Gross revenues 139,875 136,261 -2.6%
    Expenditure 111,694 109,548 -1.9%
    Operating profit 28,181 26,713 -5.2%
    Operating profit margin (%) 20.1% 19.6%  
    Other income 10,463 6,552 -37.4%
    Finance expenses 1,053 1,474 40.0%
    Depreciation & amortisation 8,179 4,971 -39.2%
    Profit before tax 29,412 26,820 -8.8%
    Tax 6,742 5,994 -11.1%
    Profit after tax 22,670 20,826 -8.1%
    Minority interest & others 58 59 1.7%
    Net profit 22,612 20,767 -8.2%
    Net profit margin (%) 16.2% 15.2%  
    No. of shares (m)   4,866.1  
    Diluted earnings per share (Rs)*   17.5  
    P/E ratio (x)*   16.6  

    * On a trailing 12-months basis


    Business Mix
    4QFY17 1QFY18 Change
    Based on geography      
    Americas 73,578 70,990 -3.5%
    Europe 32,701 31,522 -3.6%
    India and Middle East 13,268 13,547 2.1%
    RoW 14,474 14,198 -1.9%
    Based on service offerings      
    Analytics 9,247 9,287 0.4%
    Global Infrastructure Services 37,526 36,602 -2.5%
    Application Services 61,248 59,657 -2.6%
    Product Engineering 9,515 9,079 -4.6%
    BPO 16,485 15,631 -5.2%
    Based on verticals      
    Communications 9,247 8,857 -4.2%
    BFSI 34,845 34,778 -0.2%
    Manufacturing & Technology 30,557 29,308 -4.1%
    Healthcare & Life Sciences 20,639 19,278 -6.6%
    Consumer Business Unit 21,175 20,580 -2.8%
    Energy, Natural Resources and Utilities 17,557 17,454 -0.6%
    Total IT Services Revenue 134,021 130,256 -2.8%
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Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Equitymaster has financial interest in WIPRO Limited.
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Oct 19, 2017 07:33 PM

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