INTRODUCTION TO THE PROJECT:-

This project comprises of a study on fundamental analysis of WIPRO and contains economic,

company and industry analysis.

SCOPE OF THE STUDY:

The study basically makes fundamental analysis of WIPRO and contains economic, company

and industry analysis in IT sector and tries to identify the intrinsic value of the company by using

the published financial details of the company. The study is restricted to one particular company

in the sector. The study also includes testing the intrinsic value of the company.

OBJECTIVES OF THE STUDY:-

 To understand the meaning of fundamental analysis

 To understand the strength and weakness of fundamental analysis.

 To make a fundamental analysis, economic analysis and industrial analysis of IT sector

with specific reference to WIPRO.

 To recommend whether to buy, hold or sell the stock based on the analysis of p&l

account, financial ratios and comparison with peer companies.

RESEARCH METHODOLOGY:-

This project is prepared by using secondary data obtained from various websites.

LIMITATIONS OF THE STUDY:-

 The study was confined only to one particular sector and one company.

 The study was more confined with secondary data.

1
CHAPTER 1: AN INTRODUCTION TO FUNDAMENTAL ANALYSIS

What Is Fundamental Analysis?

Fundamental analysis is a stock valuation methodology that uses financial and economic analysis

to envisage the movement of stock prices. The fundamental data that is analysed could include a

company’s financial reports and non-financial information such as estimates of its growth,

demand for products sold by the company, industry comparisons, economy-wide changes,

changes in government policies etc.The outcome of fundamental analysis is a value (or a range

of values) of the stock of the company called its ‘intrinsic value’ (often called ‘price target’ in

fundamental analysts’ parlance). To a fundamental investor, the market price of a stock tends to

revert towards its intrinsic value. If the intrinsic value of a stock is above the current market

price, the investor would purchase the stock because he believes that the stock price would rise

and move towards its intrinsic value. If the intrinsic value of a stock is below the market price,

the investor would sell the stock because he believes that the stock price is going to fall and

come closer to its intrinsic value.To find the intrinsic value of a company, the fundamental

analyst initially takes a top-down view of the economic environment; the current and future

overall health of the economy as a whole. After the analysis of the macro-economy, the next step

is to analyse the industry environment which the firm is operating in. One should analyse all the

factors that give the firm a competitive advantage in its sector, such as, management experience,

history of performance, growth potential, low cost of production, brand name etc. This step of

the analysis entails finding out as much as possible about the industry and the inter-relationships

of the companies operating in the industry .The next step is to study the company and its

products.

2
Strengths and Weakness of Fundamental Analysis

Strength

 Long-term Trends:

Fundamental analysis is good for long-term investments based on long-term trends, very long-

term. The ability to identify and predict long-term economic, demographic, technological or

consumer trends can benefit patient investors who pick the right industry groups or companies.

 Value Spotting:

Sound fundamental analysis will help identify companies that represent good value. Some of the

most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and John

Neff are seen as the champions of value investing. Fundamental analysis can help uncover

companies with valuable assets, a strong balance sheet, stable earnings and staying power.

 Business Acumen:

One of the most obvious, but less tangible, rewards of fundamental analysis is the development

of a thorough understanding of the business. After such painstaking research and analysis, an

investor will be familiar with the key revenue and profit drivers behind a company. Earnings and

earnings expectations can be potent drivers of equity prices. Even some technicians will agree to

that. A good understanding can help investors avoid companies that are prone to shortfalls and

identify those that continue to deliver. In addition to understanding the business, fundamental

analysis allows investors to develop an understanding of the key value drivers and companies

within an industry. Its industry group heavily influences a stock’s price. By studying these

groups, investors can better position themselves to identify opportunities that are high-risk (tech),

3
low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer

staples), cyclical (transportation) or income oriented (high yield).

 Knowing Who's Who:

Stocks move as a group. By understanding a company's business, investors can better position

themselves to categorize stocks within their relevant industry group. Business can change rapidly

and with it the revenue mix of a company. This happened to many of the pure internet retailers,

which were not really internet companies, but plain retailers. Knowing a company's business and

being able to place it in a group can make a huge difference in relative valuations.

Weakness

 Time Constraints:

Fundamental analysis may offer excellent insights, but it can be extraordinarily time consuming.

Time-consuming models often produce valuations that are contradictory to the current price.

 Industry/Company Specific:

Valuation techniques vary depending on the industry group and specifics of each company. For

this reason, a different technique and model is required for different industries and different

companies. This can get quite time consuming and limit the amount of research that can be

performed.

4
  Subjectivity:

Fair value is based on assumptions. Any changes to growth or multiplier assumptions can

greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and use

sensitivity analysis to present a base-case valuation, a best-case valuation and a worst-case

valuation. However, even on a worst case, most models are almost always bullish, the only

question is how much so.

 Analyst Bias:

The majority of the information that goes into the analysis comes from the company

itself. Companies employ investor relations managers specifically to handle the analyst

community and release information.

5
CHAPTER 2: CASE STUDY OF WIPRO

Overview of Wipro

Wipro Infotech is a leading manufacturer of computer hardware and provider of IT services in

India and the Middle East region. Part of Wipro Ltd, the $6.98 billion conglomerate and global

leader in technology enabled solutions, the company leverages on the parent's philosophy of

'Applying Thought' to enable business results by being a transformation catalyst.

Backed by our strong quality processes and rich experience managing global clients across

various business verticals, we align IT strategies to your business goals. From simple changes in

process to innovative solutions, we help our customers harness the power of IT to achieve

profitable growth, market leadership, customer delight and sustainability. Along with our best of

breed technology partners, Wipro Infotech also helps you with your hardware and IT

infrastructure needs.

6
 Company Background

IndustryName: ComputersSoftware FaceValue: 2.0

HouseName: WiproGroup ISIN: INE075A01022

Incorporation Date: 29/12/1945 Market Lot: 1

Listing Information of Wipro

Listing Information

SECT: Information Technology

Face Value2.0

Market Lot Of Equity Shares1

BSE Code507685

BSE GroupA

 NSE:WIPROEQ 

Various Indian Stock Exchange Where Wipro Is Listed

Listed On

7
Bangalore Stock Exchange Ltd.

Calcutta Stock Exchange Association Ltd.

Cochin Stock Exchange Ltd.

Delhi Stock Exchange Assoc. Ltd.

Hyderabad Stock Exchange Ltd

Inter-connected Stock Exchange of India

Madras Stock Exchange Ltd.,

MCX Stock Exchange

National Stock Exchange of India Ltd.

Over The Counter Exchange Of India Ltd.

The Stock Exchange, Ahmedabad

The Stock Exchange, Mumbai

CHAPTER 3: FUNDAMENTAL ANALYSIS OF WIPRO

8
 A. Economic Analysis

Overview of the economy

The Indian economy is estimated to have registered a growth rate of 5.0 per cent in 2012-13 in

terms of gross domestic product at factor cost at constant 2004-05 prices, following a growth of

6.2 percent in 2011-12. Growth in 2011-12 and 2012-13 is on the lower side, in the context of

the decadal average of 7.9 per cent during 2003-04 to 2012-13. This is attributable mainly to

weakening industrial growth in the context of tight monetary policy followed by the Reserve

Bank of India (RBI) through most of 2011-12, and continued uncertainty in the global economy.

With some moderation in headline WPI inflation, there has been a reduction in the repo rate by

the RBI by 50 basis points in April, 2012 and by 25basis points in January 2013. The impact of

tight monetary policy has been reflected in the quarterly growth rates of GDP. Quarterly GDP

growth declined in each of the successive quarters between the fourth quarter of 2010-11, and the

fourth quarter of 2011-12. The slowdown in the economy, particularly in the industry sector has

entailed a lower-than budgeted growth in government revenues. However, measures undertaken

as part of mid-course correction have helped in improving the expenditure outcome in 2012-13.

Measures including the increase in the price of diesel by ` 5 per litre, allowing oil marketing

companies (OMCs) to raise diesel prices by small amounts regularly, and a cap on the number of

subsidized LPG cylinders are expected to rein in the fiscal deficit. Growth of exports for most of

the current year remained in negative territory, and with imports picking up in recent months, the

trade deficit increased to US$ 147 billion during April-December 2012. The current account

deficit (CAD) at 4.6 per cent of GDP in the first half of 2012-13 is a cause for concern. The

9
widening of the trade and current account deficits has been accompanied by a decline in the

value of the Rupee since August 2011. After attaining an all-time low of ` 57.22 per US$ on June

27, 2012 the Rupee rebounded and was in the range of 53-55 per US$ in the month of January

2013. WPI inflation, after remaining persistently high during 2010-11 and 2011-12, has shown

signs of moderation since. December 2011. However, it has remained sticky at around 7 to 8 per

cent over the last 12 months. With widespread reform measures initiated in recent months and

the global economy poised for a moderate recovery in 2013-14, the Indian economy is expected

to witness an improved outlook in 2013-14.

GDP Growth

As per the Advance Estimates released by the Central Statistics Office (CSO), the Indian

economy is estimated to register a growth rate of 5.0 per cent in 2012-13 in terms of GDP at

factor cost as against 6.2 per cent in 2011-12 and 9.3 per cent in 2010-11.

The growth is on the lower side not only as compared to the recent past but also in the context of

growth trends witnessed since 2003-04. The slowdown in the growth of the economy in 2012-13

is mainly on account of the slowdown in the industrial sector which is estimated to grow at 3.1

per cent in 2012-13 as against 3.5 per cent in 2011-12 and significantly lower growth of 1.8 per

cent in agriculture sector on top of a growth rate of 3.6 per cent achieved in 2011-12.

Services sector is estimated to grow at a rate of 6.6 per cent in 2012-13, which is also lower than

that achieved in 2011-12. The slowdown in 2011-12 and 2012-13 has been precipitated by

domestic factors as well as factors emanating from the rest of the world,particularly advanced

economies and India’s major trading partners. The crisis in the Euro-zone area and slow growth

in many other advanced economies have affected growth in India through dynamic linkages.

10
Domestic factors, including the tightening of monetary policy, in order to control inflation and

rein in inflationary expectations, resulted in slowing down of investment and growth, particularly

in the industrial sector.

As per the quarterly data released by CSO, growth in the economy was 5.3 per cent in the second

quarter of the current year. This growth has been the lowest since fourth quarter of 2008-09. The

growth of agriculture, industry and services sectors is estimated to be 1.2 per cent, 2.8 per cent

and 7.2 per cent respectively in the second quarter of 2012-13 as against 3.1 per cent, 3.7 per

cent and 8.8 per cent respectively in the corresponding quarter of 2011-12. Cumulative growth in

the first two quarters of the current year put together works out to 5.4 per cent as against 7.3 per

cent in the corresponding period last year.

Inflation

Overview of Inflation

11
In terms of expenditure method of estimation,GDP at constant market prices is projected to

register, a growth of 3.3 per cent in 2012-13 as against a growth of 6.3 per cent in 2011-12. This

slowdown in growth could be attributed to three major components the growth of consumption

expenditure, gross fixed.

1. Growth since Q4 of 2012-13 is expected to stage a gradual recovery aided by some revival in

investment demand and the favourable effect of some moderation in inflation on consumption.

Inflation in Q3 of 2012-13 has trended down, though upside risks remain from suppressed

inflation which could impart stickiness to inflation trajectory in 2013- 14. Core inflation

pressures have receded markedly and are unlikely to re-emerge quickly on demand

considerations. However, high food and fuel inflation still remain a concern and this in part is

reflected in high CPI inflation.

2. Since the beginning of 2012, the Reserve Bank has worked towards easing monetary and

liquidity conditions in a calibrated manner so as to not jeopardise the trend of moderating

inflation. The strategy yielded dividends, as headline and core inflation moderated during Q3 of

2012-13. However, monetary policy needs to continue to be calibrated in addressing growth risks

as inflation remains above the Reserve Bank’s comfort level and macroeconomic risks from twin

deficits persists.

Global Economic Conditions

Fiscal Adjustments Likely To Keep Global Recovery Muted In 2013

12
3. Though the US registered high growth in Q3 of 2012 and the pace of economic contraction

moderated in the euro area, growth prospects for advanced economies (AEs) in 2013 remain

subdued. While the immediate risk of the fiscal cliff in the US has been averted due to a hurried

deal on tax rate hikes, the debt ceiling limit and the sequester issue pertaining to expenditure

reduction are still unsettled. Growth in emerging market and developing economies (EMDEs)

may have bottomed out, but an enduring recovery hinges on global headwinds.

Global commodity price inflation likely to remain soft, although with some

risks from QE

4. Inflation in AEs is likely to remain moderate as demand remains weak, leaving the global

inflation scenario benign in the near term. As a baseline case, improved supply prospects in key

commodities such as oil and food are also likely to restrain commodity price pressures. However,

upside risks persist, especially on the back of some recovery in EMDEs and large quantitative

easing (QE) by AE central banks. In the presence of significant excess global liquidity, triggers

for supply disruptions or incremental news flow on reduced slack could exacerbate price

volatility and become a source of inflationary pressure.

Unconventional Monetary Policies Reduce Global Financial Stress in The

Interim, But Risks Remain Ahead

5. International financial market stress moderated greatly following aggressive monetary easing

measures by the central banks of AEs, as also recent policy initiatives on fiscal consolidation in

13
the euro area economies, encouraging capital flows into EMDEs. However, in the absence of

credible long-term fiscal consolidation in the US, and generally reduced fiscal space in AEs, the

efficacy of monetary policy actions may get subdued. Risks to the global financial sector,

although moderating, are likely to persist

Indian Economy: Developments and Outlook

Output

Growth Remains Below Trend, Recovery Likely In 2013-14

6. The Indian economy further decelerated in the first half (H1) of 2012-13, with moderation in

all three sectors of the economy. The weak monsoon dented agricultural performance. Policy

constraints, supply and infrastructure bottlenecks and lack of sufficient demand continued to

keep industrial growth below trend. Subdued growth in other sectors and weak external demand

pulled down the growth of services as well. Though a modest recovery may set in from Q4 of

2012-13 as reforms get implemented, sustaining recovery through 2013-14 would require all-

round efforts in removing impediments to business activity.

Aggregate Demand

Improvement in Investment Climate Is a Pre-Requisite for Economic

Recovery

14
7. Demand weakened in H1 of 2012-13. There was significant moderation in consumption as

private consumption decelerated even as government expenditure accelerated. On the fiscal side,

near-term risks have diminished due to the government’s repeated avowal of commitment to the

revised fiscal deficit target of 5.3 per cent of gross domestic product (GDP) for the year.

However, sustainable fiscal consolidation would require bringing current spending, especially on

subsidies, under control and protecting, if not enhancing capital expenditure. Going forward, the

key to demand revival lies in improving the investment climate as well as investor sentiments

through sustained reforms.

External Sector

Widening Of CAD and Its Financing Remains a Key Policy Challenge

8. The current account deficit (CAD) to GDP ratio reached a historically high level of 5.4 per

cent in Q2 of 2012-13. Low growth and uncertainty in AEs as well as EMDEs continued to

adversely impact exports in Q3 of 2012-13. This, combined with continuing large imports of oil

and gold, resulted in a deterioration of the trade balance. For the time being, strong capital flows

have enabled financing of CAD without a significant drawdown of foreign exchange reserves.

However, the possibility of volatility in these flows, which may put further pressure on the

external sector, cannot be ruled out. A two-pronged approach, of lowering CAD in the medium

term while ensuring prudent financing of CAD in the interim, is necessary from the policy

perspective.

Monetary and Liquidity Conditions

15
With tightening cycle gradually impacting inflation, the Reserve Bank takes

measures to combat tight liquidity conditions

9. Monetary policy in India has sought to balance the growth-inflation dynamics that included a

frontloaded policy rate cut of 50 basis points (bps) in April 2012 and several liquidity enhancing

measures. These included lowering of the cash reserve ratio (CRR) by 50 bps on top of a 125 bps

reduction in Q4 of 2011-12 and the statutory liquidity ratio (SLR) by 100 bps in a bid to improve

credit flows. The Reserve Bank also infused liquidity of over `1.3 trillion through outright open

market operation (OMO) purchases during 2012-13 so far. However, growth in monetary

aggregates remains below the indicative trajectory.

Financial Markets

Domestic Reform Initiatives and Surging Capital Flows Improve Market

Sentiment and Revive the IPO Market

10. Improved global sentiments along with recent policy reforms by the government beginning

September 2012, and market expectations of a cut in the policy rate in the face of moderation in

inflation, aided FII flows into the domestic market. The equity markets showed significant

turnaround, while the rupee remained range-bound. In addition, revival is witnessed in the IPO

segment. Although Indian financial market sentiments improved significantly in Q3 of 2012-13,

some macroeconomic concerns persist, as witnessed in the inverted yield curve. Sustained

commitment to curtail twin deficits and nurture growth without fuelling inflation is critical to

support investor confidence.

16
Price Situation

Headline and Core Inflation Moderated, But Suppressed Inflation Poses Risks

11. Headline inflation moderated in Q3 of 2012-13 with significant moderation in nonfood

manufactured products inflation. Both weakening domestic demand and lower global commodity

prices contributed to the softening of headline inflation. Though the recent hike in diesel prices

will put some pressure on the overall price level, the near-term inflation outlook indicates that

the moderation may continue through Q4 of 2012-13. While the pressure from generalized

inflation remains muted at the current juncture, risks from suppressed inflation, pressure on food

prices and high inflation expectations getting entrenched into the wage-price spiral need to be

reckoned with. The inflation path for 2013- 14 could face downward rigidity as some of the risks

from suppressed inflation materialize.

Macroeconomic Outlook

Balance of Macroeconomic Risks Suggest Continuation of Calibrated Stance

12. Reforms since September 2012 have reduced immediate risks, but there is a long road ahead

to bring about a sustainable turnaround for the Indian economy. Business sentiments remain

weak despite reform initiatives and consumer confidence is edging down. The Reserve Bank’s

survey of professional forecasters anticipates a slow recovery in 2013-14 with inflation

remaining sticky. Fiscal risks have somewhat moderated in 2012-13, but a sustained commitment

to fiscal consolidation is needed to generate monetary space. Widening CAD, which is at

historically high level, remains a constraint on monetary easing. Against this backdrop, while

17
growth can be supported by monetary policy if inflation risks recede, credible fiscal correction

with improved execution in infrastructure space to boost investment would be needed for a

sustained revival. The balance of macroeconomic risks suggest continuation of the calibrated

stance while increasingly focussing on growth risks

B. Company analysis

18
Quarterly Profit & Loss of Wipro

Jun-
Rs in cr. Jun-13 Mar-13 Dec-12 Sep-12
12

Net Sales 9733 9613 9588 10620 9248

Other Operating Income 0 0 0 0 0

Total Income 9733 9613 9588 10620 9248

% change 0 0 0 0 0

Total Expenditure 7713 7657 7537 8482 7256

EBITDA 2020 1956 2050 2138 1991

% change (EBITDA) 3 -5 -4 7 9

EBITDA Margin (%) 21 20 21 20 22

Depreciation 250 243 248 280 245

EBIT 1770 1713 1803 1859 1746

Interest 50 40 47 54 129

Other Income 336 461 417 323 356

PBT 2057 2135 2173 2128 1973

Tax 425 397 447 508 383

% PBT 21 19 21 24 19

Reported Profit After Tax 1632 1737 1725 1621 1590

Minority Interest 8 9 9 10 10

Net Profit afer Minority Int. 1623 1729 1716 1611 1580

Extra-ordinary Items 0 0 0 0 0

Adjusted Profit 1623 1729 1716 1611 1580

19
Equity 493 493 493 492 492

Face Value 2 2 2 2 2

EPS (Unit Curr.) 7 6 7 7 6

EPS TTM (Unit Curr.) 26 25 25 25 23

Financial Ratios of Wipro

Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar-

Praticulars Particulars
13 12 11 10 13 12 11 10
Valuation Per share Data:

Ratios: (x) (Rs.)

P/E 18.79 20.08 21.26 24.37 EPS(Basic) 24.26 22.75 21.52 31.39
EV/Total
3.46 3.32 3.95 4.56 Cash EPS 28.06 26.71 24.74 36.54
Assets
P/BV 5.31 5.55 6.58 8.69 DPS 7.00 6.00 6.00 6.00
EV/Sales 2.90 2.98 3.61 4.12 BookValue 85.85 82.28 69.55 88.00
Dividend Yield
EV/EBITDA 14.16 15.75 17.37 18.83 1.63 1.31 1.31 0.78
(%)
Growth:(%) Solvency Ratios:

20
 Interest Coverage
Sales Growth 1.00 20.00 14.00 6.00 23.21 17.61 29.28 42.17
(EBIT / Interest)
EBITDA Net debt to
9.00 9.00 8.00 22.00 -0.51 -0.21 -0.05 -0.04
Growth EBITDA
Net Profit Net Debt to
7.00 6.00 15.00 20.00 -0.15 -0.05 -0.01 -0.01
Growth equity
Current Ratio 2.14 2.64 2.44 2.26
Margins:(%) Returns:(%)
EBITDA
20.00 19.00 21.00 22.00 Angel ROIC * 66.00 43.00 51.00 64.00
Margin
PBT Margin 21.00 19.00 20.00 20.00 ROCE 21.00 18.00 20.00 21.00
Net Profit
16.00 15.00 17.00 17.00 ROE 22.00 21.00 23.00 25.00
Margin

21
Quarterly

Ratios:
Growth rate Jun- Mar- Dec- Sep- Growth rate qoq: Jun- Mar- Dec- Sep-

yoy:(%) 13 13 12 12 (%) 13 13 12 12
YOY EBITDA QoQ EBITDA
1.46 7.18 3.32 22.90 3.00 -5.00 -4.00 7.00
Growth Growth
YOY Sales QoQ Sales -
5.00 13.00 -4.00 17.00 1.00 0.00 15.00
Growth Growth 10.00
YOY Net QoQ Net Profit
3.00 17.00 18.00 24.00 -6.00 1.00 7.00 2.00
Profit Growth Growth

22
 C. Industry Analysis

Analysis of Indian IT Companies

Peer Comparison:-

P/BV
P/E EV/EBIDT
Market Cap (TTM ROE ROCE D/E
Company (TTM) A
(Rs. in Cr.) ) (%) (%) (x)
(x) (x)
(x)
TCS 382,211.80 28.84 11.77 18.37 44.6 53.7 0.00
Infosys 172,016.46 19.88 4.77 10.93 27.7 37.5 0.00
Wipro 117,156.70 19.83 4.84 12.83 23.3 25.0 0.23
HCL Technologis 74,047.05 20.51 7.24 11.74 31.3 32.3 0.17

 TCS:

23
TCS is the bell weather in IT sector and has maintained to be the large cap stock among all the

IT stocks on the Indian Bourses. Recently TCS has earned the Xclent customer base award 2012

for its TCS BaNCS banking software.

It  sees  better IT  spends, ramp-up in its clients in the US as compared to earlier and the fact that

TCS has 8% wage hike is showing that the company is expecting more revenue growth

compared to its peers.

This is the company that was affected by the recession during 2008-09 because of its diversified

network, at that point of time it decreased its cost by firing 300000 employees and maintained

46.7 EPS higher compared to other years.

Looking at TCS financials:

TCS is allocating 15% of its income to its contingent liability which shows the ability of the

company to maintain its growth even in its aggressive acquisitions.

It has maintained good reserves and decreasing debt which will be the safest parameters for the

investor to look at to invest.

Looking at TCS ratios:

24
Debt to Equity ratio is 0.01 this means TCS has one paisa of debt to equity which shows it has

low debt and the PAT is 415 times higher than the interest paid by the company.

It is a low beta stock which means it will not be affected by the market forces, rather its

performance is the key, it has shown a consistent EPS growth rate of 6% and the PE growth rate

of 10%, using this parameter it is projected that the share price may stand at Rs.1372 in a year if

the company maintains to continue its exports which inversely gain revenues from the dollar

appreciation.

The return on net worth is 37% which is the highest in the sector.

INFOSYS:

25
India’s second-largest software services exporter by Revenue’s and which is another Bellwether

IT stock, has been weak in keeping its financials than other IT companies and also Analysts

estimates., In spite of the initiative of leading a government effort to give every Indian citizen an

ID number, a crucial initiative in a country where most people have no driver’s license, passport

or even birth certificate.

Apart from this the other factor that drove Infosys share price by 10% decrease in share price

over the last year was due to Visa fraud charges leveled in the United States. It has continued to

maintain the name of “company with politics” and bad reputation in the eyes of employees with

regards to the salary hikes and work pressure.

The company has been good to give employee appraisal rather than rewards, on the other side of

the coin it has the ability to make any employee proficient to work in another company.

Looking at INFOSYS Financials:

There is a perception among the accountants and the investors that in the presentation of the

financial statement by Infosys is the best with its Zero Debt, increased revenues and reserves.

Infosys has an average income growth rate of 19% and it has allocated 4% of its income to its

contingent liability which is higher than past year and has been increasing YOY.

Among all the other giants in the IT sector Infosys has the highest FII holding of 37.36% (as on 1

May 2012), If the company gives high growth rate in the next quarter it can become a good stock

after HCL Technologies.

26
Looking at INFOSYS ratios:

Infosys is a low beta stock. Infosys has 10% average EPS growth rate and 6% P/E over the years.

If the company continues to maintain the same momentum in generating more revenues and

along with the continuity in its reserves and income, it is projected that the share price could be

at Rs.3772 in a year with its current average growth rate.

Wipro: 

27
The company that started with the innovation and integrity in the consumer product business is

now the 3rd largest IT services company in India and entered into the Forbes top 500 companies

list.

Wipro’s IT services and Hardware accounted for 75% of its total revenues till the year 2011 and

its results has come in line with the expert expectations.

 After tasting sweet success with its Glucose Powder Brand Glucovita, Wipro Consumer Care &

Lighting (WCCL) now plans to launch the product in the tablet form as well, where an individual

can have two tablets and get instant energy.

WCCL’s first major overseas acquisition was the Singapore-based Unza Holdings for around Rs

1,000 crore in 2007, through which it operates in 40 countries.

Looking at Wipro’s financials:

The consolidated result takes into account all the segments, in which the Consumer Care and

Lighting accounted for more than the IT services during the year ended 2012.

Wipro has 1% of its income as its contingent liability which is a good parameter for investment,

it has good reserves, it has negative cash flows, and company is going to invest 100 crores this

fiscal to increase the capacity in various categories, be it lighting, soaps or personal care, to meet

demand.

Looking at Wipro’sRatios

28
Wipro is a low beta stock. Wipro has 22 Paisa debt for every rupee of its equity.

The average growth of EPS is 4% and P/E is 5% the estimated price stood at Rs.527, company

has PAT 82 times to its interest cost.

HCL Technologies: 

29
It occupied 4th place in the top IT companies in INDIA and it is after the Giant TCS in generating

revenues, HCL consistently has been increasing its quarterly performance, through better

revenue visibility and winning the market share.

The share price has gained around 25% over the past and they won about USD 2.5 billion of

deals over the last couple of quarters, it is expected that in the next two quarters HCL is going to

outperform in the industry over the others.

According to the Technical Analysis the resistance is at 519-521 now it is trading at 512(as on

30 April 2012) which can shoot up in the future.

It is the hot stock in the IT sector of INDIA. It granted employee stock options of around

206.70crores which is the different treatment of employees in the entire sector.

Looking at HCL Technologies financials:

It is maintaining 4% of its income as contingent liability which is the average of the industry, it

has shown good income, reserves and the company have high debt when compared to the other

companies so, compare with the return on the investment it has Rs.10 return on every one rupee

it spends.

Looking at HCL Technologies ratios:

30
Return on net worth is 22% which shows that the company has good managerial abilities.

It has 22 paise of debt for every rupee it spends.

It maintained average EPS growth rate of 15% and P/E of 26% which is highest in the sector,

using these parameters it can be said that the price of the share will stand at Rs.687 in the future,

keeping a look on its financials and ratios it is for a short term investment until and unless it

decreases it debt.

CONCLUSION:

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Analysis of the economy

The IT sector earns income in dollars as they are mainly the exporters. In past 4

months rupee depreciated against dollar. So the entire it sector specially WIPRO

has made good amount of profit in last quarter.

Analysis of the company

Looking at the P&L account:

According to the current scenario for past six months, WIPRO has made net profit of rupee 1623

had depreciated in terms of dollar.

It can be seen that year on year the sales and revenue (total income) has also increased. It can be

seen that in June 2012 the sales and total income were rupees 9248 and by June 2013 it increased

to rupees 9733.

The EBIT of company in June 2012 was rupees 1746 whereas by June 2013 it increased to

rupees 1770.the reported profit after tax in June 2012 was rupees 1590 and in June 2013 was

rupees 1632.all this indicates that the company has good sales and valuation .the company’s

future seems to be attractive. All this gives is an indication that we should buy WIPRO for long

term.

Looking at financial ratios

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P/E ratio of the company is less compared to the peer. So the returns seem to be good and we

should invest in WIPRO.

All the above ratios shows the company’s overall performance was good in 2010.in 2012 the

performance deteriorated but it again improved in 2012.

Analysis of the industry

Among the top four companies of the IT sector in India, TCS is the good going stock and it has

ability to double its share price in the near future by its outstanding numbers.

It is a stock for long term holding, next is the HCL technologies which is in the race to occupy

the top rank in the sector though it is a short term investment stock and can generate more

revenues in the near future with its upcoming deals and it continued in paying dividends.

Wipro is expected to grow in the near future by its investment activities and it is better to don’t

step onto Wipro and Infosys till they show big numbers like TCS.

BIBLIOGRAPHY

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 www.stockmarketinstitute.org

 http://stockmarketinstitute.org/blog/?tag=wipro-fundamental-analyis

 http://www.rbi.org.in/scripts/PublicationsView.aspx?id=14923#top

 http://www.slideshare.net/sivapriya28/wipro-technologies-ltd?from_search=4

 http://indiabudget.nic.in/ub2013-14/frbm/frbm1.pdf

 http://www.angelbroking.com/

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