12-Jul-2022

WIPRO LIMITED
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 ABOUT
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Wipro Limited, incorporated in 1945, is a leading global information technology (IT), consulting and business process services
DHD The company derives revenue primarily from software development, maintenance of software/hardware and related
company.
services, business process services, sale of IT and other products. It is a provider of IT services and products wherein, IT Services
segment provides a range of IT and IT-enabled services (ITeS) which includes digital strategy advisory, customer centric design,
technology consulting, IT consulting, custom application design, development, re-engineering & maintenance, systems integration,
package implementation, global infrastructure services, analytics services and hardware & software design to enterprises worldwide.

IT Products segment provides a range of third-party IT products which include computing, platforms & storage, networking solutions,
enterprise information security & software products, including databases and operating systems. Its other segment, India State Run
Enterprise segment (ISRE) consists of IT services offerings to organizations owned or controlled by the Government of India (GoI) and/
or any Indian State Governments.

Azim H. Premji is the company’s founder Chairman and Rishad A. Premji is its current Chairman. It had done six acquisitions in the
last few quarters - Capco, Ampion, LeanSwift, Edgile , CAS Group and, most recently , Rizing—with each acquisition creating new
synergies and differentiators for the company in key strategic markets and deepening its consulting domain expertise in high-growth
industries. In FY22, 39% of order book came through partnerships with the likes of AWS, Microsoft, Google, Salesforce, ServiceNow,
SAP, IBM among many others.

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NEW OPERATING STRUCTURE

DHD

Americas 1 includes Healthcare and Medical Devices, Consumer Goods and Lifesciences, Retail, Transportation and Services, Communications, Media and
Information services, Technology Products and Platforms, in the United States of America and entire business of Latin America
Americas 2 includes Banking, Financial Services and Insurance, Manufacturing, Hi-tech, Energy and Utilities Industry sectors in the United States of America and
entire business of Canada
Europe consists of United Kingdom and Ireland, Switzerland, Germany, Benelux, the Nordics and Southern Europe
APMEA consists of Australia and New Zealand, India, Middle East, South East Asia, Japan and Africa

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Revenue Mix (FY22)

DHD
Global Business Lines Wise Geography Wise Sector Wise

5%
7%
11%
28% 12%
35%
39%
30%
12%
61%

31% 12%
17%

BFSI Consumer Health

iDEAS iCORE Americas 1 Americas 2
ENRU Technology Manufacturing
Europe APMEA Communications

BFSI: Banking, Financial Services & Insurance

ENRU: Energy, Natural Resources & Utilities

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 GROWTH
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DHD SALES GROWTH

In FY22, revenue from operations of the company
increased to ₹79,312 cr as compared to ₹61,934
cr in FY21, representing a 27.8% growth on a YoY
basis. The revenue for all SMUs grew during the
year. The acquisition of Capco contributed
revenues of ₹6,662 crore.
The growth was led by IT services business, as
there was a surge in demand for services by its
customers, ramp ups of new deal wins and
depreciation of the Indian Rupee against foreign
currencies, including the USD, Pound Sterling,
Australian Dollar and Canadian Dollar.
The order bookings in ‘Annual Contract Value’
terms grew 30% on a YoY basis. In FY22, it had a
closed 37 large deals with TCV of $2.3 billion.

5 Year CAGR: 7.4%

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DHD EBITDA GROWTH

In FY22, EBITDA was ₹16,684 cr as compared to
₹14,771 in FY21 witnessing an increase of ~13%
YoY. The growth in EBITDA was due to increase in
revenue.
Employee cost as a percentage of revenue was
56.7%, while on YoY basis it increased by
35.4% .

5 Year CAGR: 8.1%

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DHD PAT GROWTH

In FY22, PAT was ₹12,238 cr, recording a growth of
~13% YoY as compared to ₹10,855 cr in FY21. The
increase in PAT was driven by an increase in
EBITDA.
The acquisition of Capco contributed profit after
taxes of ₹434 cr for the Company during the year
ended 31st March 2022, while the other
acquisitions completed during the year
contributed profit after taxes of ₹6 cr.

5 Year CAGR: 7.5%

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 GROWTH EDGE METER: 3
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 PROFITABILITY
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DHD EBITDA MARGIN

In FY22, EBITDA margin decreased to 23.6% from
27.7% in FY21.
The margins declined primarily due to an increase
in employee compensation owing to the impact of
salary increases. This was underpinned by an
increase in headcount, including through its
acquisitions, incremental subcontracting costs
incurred to fulfil vacant positions, increase in
facility expenses due to partial return of
employees to offices.

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DHD PAT MARGIN

In FY22, the PAT margin has decreased to 15.4%
from 17.5% on a YoY basis.

The PAT margin contracted due to the contraction

in the EBITDA margin.

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DHD ROCE
For FY22, the ROCE was 21.8%.
Capital employed grew more than the growth in
EBIT.
EBIT grew on account of higher revenue from
operations in FY22.
0

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DHD ROE
The company has been generating healthy and
stable ROE. In FY22, the ROE was 20.5%. The ROE
has improved in FY22.

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 PROFITABILITY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 EFFICIENCY
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DHD CASH FLOWS

In FY22, the cash flows from operations decreased
to ₹11,080 cr. The decrease was primarily due to
increased working capital requirements, increase
in trade receivables, unbilled receivables.
Cash used in investing activities for the year ended
31st March 2022 was ₹22,450 cr. Cash utilized
towards payment for business acquisitions worth
₹12,985. Further, it purchased investments and
property, plant and equipment. It also deposited
an amount of ₹2,741 cr for payment of the interim
dividend which was declared by the company on
25th March 2022.
Cash generated from financing activities in FY22
was ₹4,659 cr. This was primarily on account of
net inflow from loans and borrowings of ₹6,831 cr.
This was partially offset by payment towards lease
liabilities, interim dividend and interest.

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 EFFICIENCY
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WORKING
DHD CAPITAL CYCLE
The company’s working capital cycle has been
negative and it is not a major concern for the
company.

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 EFFICIENCY
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DHD FREE CASH FLOW

Free cash flow per share in FY22 decreased to
₹17.6 from ₹25.5 in FY21. it witnessed the decline
due to decrease in operating cash flows generated
by the company.
The free cash flow as percentage of net income
was 75% in Q4 FY22.

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 EFFICIENCY
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ASSET
DHD TURNOVER RATIO
Asset turnover ratio in FY22 was 0.84x and it has
been increasing for the last 4-5 years. Short-term
investments and cash & cash equivalents
constituted ~32% of total assets of the company.
Human resource being the main asset for an IT
company, it is imperative to look at the attrition
rates. It refers to the number of employees who
have voluntarily left the organization in the
preceding 12 months. The TTM attrition rate for
the quarter ended 31st March 2022, was 23.8%
with a total headcount of 2,43,128 as on 31st
March 2022. The industry as a whole is gripped
with high attrition rate due to the demand of
skilled talent outpacing its supply.

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 EFFICIENCY EDGE METER: 3
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 SOLVENCY
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DHD DEBT TO EQUITY

The company further took loan on FY22 taking the
debt-to-equity ratio to 0.23x.

Total non-current liabilities was ₹11,218 cr

while Total current liabilities was ₹30,833 cr.
The increase of LTB was more as compared to
STB.
In the total debt figure, short-term borrowing
(STB) had a higher proportion as compared to
long-term borrowing (LTB) .
In Q1 FY22, the company made first ever bond
offering in the international markets of $750
million with a 5-year tenor.

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 SOLVENCY
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INTEREST
DHD COVERAGE RATIO
The company had an interest coverage ratio of
29.4x in FY22. The metric increased as percentage
change in EBIT increased more than the
percentage in finance cost.
Total finance cost in FY22 was ₹533 cr.

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 SOLVENCY
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DHD CURRENT RATIO

In FY22, the company’s current ratio was 2.01x.
The decrease in the ratio can be attributed to
higher percentage increase in current liabilities as
compared to current assets.
Current assets of the company constituted ~58%
of total assets of the company. Short-term
investments represented the majority of current
assets.
Current liabilities accounted for ~73% of total
liability of the company. Short-term borrowings
constituted the majority of current liabilities.

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 SOLVENCY EDGE METER: 5
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 VALUATION
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DHD PE RATIO
Wipro is currently trading at a TTM PE multiple of
18.34x.
The industry TTM PE stands at 26.02x.
The company had been struggling with growth
prospects for the past few years.
However, with the renewed focus of the
management towards its growth prospects from
both organic and inorganic sources, the PE of the
company has seen a re-rating.

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 VALUATION
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DHD DIVIDEND YIELD

The cash dividend paid during the year ended 31st
March 2022 was an interim dividend of ₹1 per
equity share. Further, the Board declared a final
dividend of ₹5 per equity share, which was
subsequently paid on April 19, 2022.
The dividend payout ratio stood at ~26.9% in
FY22. The company has been rewarding its
shareholders by providing regular buybacks of
₹9,500 cr in FY21, ₹10,500 cr in FY20 and ₹11,000
cr in FY18.
The company has also provided the shareholders
with bonus shares in the ratio of 1:3 in FY19 and
1:1 in FY18.

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 VALUATION
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DHD KEY LEVELS

Wipro Ltd had been consolidating in the range of
₹150 to ₹300 since the year 2014. The stock gave
a price volume breakout in Sep 2020, and has
been in a secular uptrend. The stock has tested a
lifetime high of ₹740 in Oct 2021. Post which the
price has witnessed some cooling off.
The zone of ₹360-₹400 is likely to act as a strong
support and can be used by long term investors
for accumulation.

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 VALUATION EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 QUALITY
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DHD MANAGEMENT
The management team is led by Thierry
Delaporte, who is the CEO and MD of the
company.
The company is focusing on multiplying its
business solutions, and building a catalog of
industry-specific solutions, relevant to the clients
in their industries by leveraging industry expertise,
technology capability and ecosystem partnerships.

The company doubled its fresher intake for FY22

when compared to the previous year and it plans
is to double this in FY23 as well. It anticipates
operating margin to be in the range of 17%-17.5%
for medium term. However, it expects to see
lower margins for the next 2-3 quarters.

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 QUALITY
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SHAREHOLDING
DHD PATTERN
Promoters shareholding as on 31st March 2022,
stood at 73%.
In Q4 FY22, FII stake decreased to 8.12% from
9.34% in Q3 FY22. DII’s stake in the company
increased to 3.24% in Q4 FY22 from 2.77% in Q3
FY22.
As the company is also listed on NYSE (New York
Stock Exchange), 2.46% of its share capital as on
31st March 2022, was represented in the form of
ADRs (American Depository Receipts).
Top Public Shareholding:-
LICI Asm Non Par 3.27%
JP MORGAN CHASE BANK, NA 2.46%
IEPF 0.04%

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 QUALITY
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DHD SECTOR POTENTIAL

• According to NASSCOM, the Indian IT services industry crossed the $200 billion revenue mark this financial year to touch a record
$227 Bn. During the year, the industry saw $30 billion of incremental revenues and an overall growth rate of 15.5%.
• Global technology spending grew strongly in 2021 to $1.7 trillion. The primary drivers were accelerated investments in digital
transformation and cloud adoption in response to changed consumer behaviors and the need for greater operational resilience.
• Further, with one out of three employees already digitally skilled, the digital tech talent pool stands at 1.6 million, growing at a
CAGR of 25%. The industry recorded nearly 10% estimated growth in direct employees in FY22, with the highest-ever net addition
of approximately 4,50,000 to its employee base. India is the topmost off-shoring destination for IT companies across the world.
Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer
an entire new gamut of opportunities for top IT firms in India.
• Companies are investing in large and complex cloud migration and transformation programs, creating multi-year opportunities for
consulting services and implementation. Due to increased demand for hyper personalized products and services, next generation
technologies such as data and AI , mixed reality, digital engineering, blockchain, multi-cloud, cybersecurity, edge computing, and
5G is expected to continue to grow exponentially.
• Cloud technology is a priority for majority of the organizations, while cyber-security concerns are at the top of mind of CEOs. AI,
automation, data analytics, IoT and robotics will be the key drivers of the future tech stack.
• Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing to invest internationally
to expand global footprint and enhance their global delivery centres. (Source : www.ibef.org)

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 QUALITY
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COMPETITIVE
DHD LANDSCAPE
Wipro is one of the leading companies in the IT
sector. With its wide range of services, it offers a
tough competition to the companies around it.
The market for IT services is competitive and
rapidly changing. The company’s choice of sectors
in the market is being driven by both market
attractiveness, competitive positioning and
strengths. It has therefore prioritized specific
sectors in certain markets, and will build or
sustain, as the case may be, its leadership position
in those intersections.
Its investments in developing IP across products,
platforms, frameworks, solutions, components,
accelerators, tools and apps enables it to provide
standardized solutions to its customers and obtain
enormous time-to-market advantage.

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DHD FUTURE OUTLOOK

• The company is accelerating its investments in Topcoder platform and in emerging areas such as Metaverse, Web 3.0, Robotics,
self-learning AI, and privacy systems.
• It completed the acquisition of CAS Group on 11th April 2022 and the payment of upfront cash consideration of ₹392 cr was
funded through cash and cash equivalents. In April 2022, the company acquired Convergence Acceleration Solutions, LLC, a US-
based consulting, and program management company that specializes in driving large-scale business and technology
transformation for Fortune 100 communications service providers.
• In May 2022, the company acquired Rizing Intermediate Holdings, Inc. and its subsidiaries, a global SAP consulting firm with
industry expertise and consulting capabilities in enterprise asset management, consumer industries, and human experience
management in North America, Europe, Asia, and Australia. The company also completed acquisition of Rizing on 20th May 2022,
and the payment of upfront cash consideration of ₹4,462 cr was funded through borrowings and cash and cash equivalents.
• The company sees strong growth potential in Technology, Media and Telecommunications. In Banking and Financial Services the
company is growing its eminence as the preferred partner for consulting, technology, and digital transformation services.
• The company is investing $1 billion in Wipro FullStride Cloud Services over the next few years to deliver an orchestrated
transformation that accelerates business results for clients. it launched Wipro FullStride Cloud Services to bring together portfolio
of cloud offerings, talent, capabilities, and Cloud Studio.

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 QUALITY EDGE METER: 4
An Edge Meter is a graded measurement of certain aspects of a company on a scale of 1 to 5, 5 denoting the highest rating. Since
judgement on equity is subjective because different people will have different expectation from their investments, it is better to study
each aspect and give an individual grading to arrive at the final evaluation of a stock.
 FINAL
ABOUTEDGE
THE MATRIX
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DHD
Edge Meter Aspects Grade
Growth 3
Profitability 4
Efficiency 3
Solvency 5
Valuation 4
Quality 4
TOTAL 23

The maximum grade for a company could be 30. Any company above grade 20
is worth considering. A grade below 15 is considered to be poor.
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DHD

THANK YOU
This document and the process of identifying the potential of a company has been produced only for learning purposes. Since
equity involves individual judgements, this analysis should be used for only learning enhancements and cannot be considered to
be a recommendation on any stock or sector. Our knowledge team has limited understanding and we all are learning the art and
science behind this.

www.stockedge.com

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DISCLOSURES
DHD
Neither Kredent Infoedge P Ltd. nor any of its associates have any financial interest in the subject company.
Neither Kredent Infoedge P Ltd. nor any of its associates have actual/beneficial ownership of one per cent or more securities of the subject company, at the end of
the month immediately preceding the date of publication of the research report or date of the public appearance.
Neither Kredent Infoedge P Ltd. nor any of its associates has, any other material conflict of interest at the time of publication of the research report or at the time
of public appearance.
Neither Kredent Infoedge P Ltd. nor any of its associates have received any compensation from the subject company in the past twelve months.
Neither Kredent Infoedge P Ltd. nor any of its associates have managed or co-managed public offering of securities for the subject company in the past twelve
months.
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the subject company in the past twelve months.
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banking or brokerage services from the subject company in the past twelve months.
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