WIPRO 2018-19 Annual Report Analysis

Sun, 31 Mar

WIPRO has announced its results for the year ended March 2019. Let us have a look at the detailed performance review of the company during FY18-19.

WIPRO Income Statement Analysis

• Operating income during the year rose 8.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 12.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 19.7% in FY19 as against 19.0% in FY18.
• Depreciation charges decreased by 7.8% and finance costs increased by 26.5% YoY, respectively.
• Other income grew by 2.1% YoY.
• Net profit for the year grew by 12.7% YoY.
• Net profit margins during the year grew from 14.7% in FY18 to 15.3% in FY19.

WIPRO Income Statement 2018-19

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Net Sales	Rs m	544,871	590,189	8.3%
Other income	Rs m	25,594	26,138	2.1%
Total Revenues	Rs m	570,465	616,327	8.0%
Gross profit	Rs m	103,764	116,169	12.0%
Depreciation	Rs m	21,117	19,467	-7.8%
Interest	Rs m	5,830	7,375	26.5%
Profit before tax	Rs m	102,411	115,465	12.7%
Tax	Rs m	22,391	25,243	12.7%
Profit after tax	Rs m	80,020	90,222	12.7%
Gross profit margin	%	19.0	19.7
Effective tax rate	%	21.9	21.9
Net profit margin	%	14.7	15.3

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WIPRO Balance Sheet Analysis

• The company's current liabilities during FY19 stood at Rs 214 billion as compared to Rs 214 billion in FY18, thereby witnessing an increase of 0.4%.
• Long-term debt down at Rs 28 billion as compared to Rs 45 billion during FY18, a fall of 37.3%.
• Current assets rose 13% and stood at Rs 572 billion, while fixed assets rose 3% and stood at Rs 252 billion in FY19.
• Overall, the total assets and liabilities for FY19 stood at Rs 824 billion as against Rs 750 billion during FY18, thereby witnessing a growth of 10%.

WIPRO Balance Sheet as on March 2019

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*	% Change
Networth	Rs m	477,491	561,609	17.6
Current Liabilities	Rs m	213,507	214,350	0.4
Long-term Debt	Rs m	45,268	28,368	-37.3
Total Liabilities	Rs m	750,025	823,644	9.8
Current assets	Rs m	506,156	571,906	13.0
Fixed Assets	Rs m	243,869	251,738	3.2
Total Assets	Rs m	750,025	823,644	9.8

WIPRO Cash Flow Statement Analysis

• WIPRO's cash flow from operating activities (CFO) during FY19 stood at Rs 116 billion, an improvement of 38.1% on a YoY basis.
• Cash flow from investing activities (CFI) during FY19 stood at Rs 50 billion, an improvement of 40.9% on a YoY basis.
• Cash flow from financial activities (CFF) during FY19 stood at Rs -49 billion, an improvement of 62% on a YoY basis.
• Overall, net cash flows for the company during FY19 stood at Rs 118 billion from the Rs -10 billion net cash flows seen during FY18.

WIPRO Cash Flow Statement 2018-19

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-18	Mar-19
Cash Flow from Operating Activities	Rs m	84,233	116,316	38.1%
Cash Flow from Investing Activities	Rs m	35,578	50,126	40.9%
Cash Flow from Financing Activities	Rs m	-129,978	-49,369	-
Net Cash Flow	Rs m	-9,792	117,599	-

Current Valuations for WIPRO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 15.0, an decline from the EPS of Rs 17.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 254.8, stands at 16.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 2.5 times, while the price to sales ratio stands at 2.6 times.
• The company's price to cash flow (P/CF) ratio stood at 13.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Sales per share (Unadj.)	Rs	120.4	97.8
TTM Earnings per share	Rs	17.7	15.0
Diluted earnings per share	Rs	14.6	16.5
Price to Cash Flow	x	15.3	13.3
TTM P/E ratio	x	19.3	16.5
Price / Book Value ratio	x	2.7	2.6
Market Cap	Rs m	1,301,719	1,453,575
Dividends per share (Unadj.)	Rs	1.0	1.0

Ratio Analysis for WIPRO

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.7x during FY19, from 2.4x during FY18. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 16.7x during FY19, from 18.6x during FY18. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 16.1% during FY19, from 16.8% during FY19. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 20.8% during FY19, from 20.7% during FY18. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 11.8% during FY19, from 11.4% during FY18. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-18*	12 Mar-19*
Current ratio	x	2.4	2.7
Debtors’ Days	Days	68	62
Interest coverage	x	18.6	16.7
Debt to equity ratio	x	0.1	0.1
Return on assets	%	11.4	11.8
Return on equity	%	16.8	16.1
Return on capital employed	%	20.7	20.8

To see how WIPRO has performed over the last 5 years, please visit here.

WIPRO Share Price Performance

Over the last one year, WIPRO share price has moved down from Rs 281.5 to Rs 254.8, registering a loss of Rs 26.7 or around 9.5%.

Meanwhile, the S&P BSE IT Index is trading at Rs 15,280.3 (up 0.4%). Over the last one year it has moved up from 12,100.6 to 15,280.3, a gain of 3,180 points (up 26.3%).

Overall, the S&P BSE SENSEX is up 16.3% over the year.

(To know more, check out historical annual results for WIPRO and quarterly results for WIPRO)

Read: Latest Annual Report Analysis of WIPRO