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Wipro net vaults 75% - Views on News from Equitymaster
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  • Oct 30, 1999

    Wipro net vaults 75%

    Wipro has posted 75% net profit growth in 2QFY2000. This was reported by a leading financial newspaper.

    Wipro Ltd., (of Wipro Corporation) is a conglomerate dealing in the businesses of information technology (IT), financial services, healthcare systems, consumer lighting and hydraulic products. Its IT division is the premier PC and peripherals supplier and the second largest software exporter in the country. It has bagged the SEI-CMM Level 5 accreditation for software development.

    As was to expected with the increasing focus on IT, the latter has pushed Wipro's 2QFY2000 net to Rs 710 m (up 75%). Revenues have appreciated 21% to Rs 5.5 bn.

      2QFY2000 2QFY1999 Change
    Net Sales 5,529 4,574 20.9%
    Other Income 64 60 6.7%
    Expenditure 4,596 3,938 16.7%
    Interest 80 102 -21.6%
    Depreciation 161 162 -0.6%
    Profit before Tax 756 432 75.0%
    Tax 46 23 100.0%
    Profit after Tax 710 458 55.0%
    Net profit margin 12.8% 10.0%  

    In future, the company plans to amalgamate the Wipro Computers (erstwhile Wipro Acer) with itself with effect from April 1, 1999. Subsequent to the split with Acer, Wipro markets its own PCs (SuperGenius), It continues to offer servers (Acer, Sun Micro), printers (Canon, Epson), and networking products (Cisco, Motorola, 3Com).

    Wipro has lined up plans to invest close to Rs 2 bn per annum over the next two to three years. Not surprisingly, more than 70 per cent of this amount will be invested in the IT business, Wipro's golden goose. Its ISP venture has been spun off into a separate JV - Wipro Net, in association with KPN (Royal Dutch Telecom). It plans to corner the business-to-business segment of this lucrative emerging market. The company has also identified the Internet and e-commerce as a major thrust area and has made sizeable investments in this business.

    Market view:
    Some analysts find Wipro''s current valuations too rich, although they don't doubt the company's strong fundamentals. Therefore, they have put the company on ''HOLD''. But some others are very impressed with its explosive 2QFY2000 net profit growth (up 75%) and flag it as a 'BUY'.



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