*Wipro Q3FY20 (Cons - Audited)*
Total Revenue from ops at 15,470 Cr
15,059 Cr (2.72%) YoY |15,126 Cr (2.23%) QoQ
9 months ending 45,312 Cr vs. 43,578 Cr (3.98%)
Net Profit of 2,463 Cr
2,544 Cr (-3.16%) YoY 2,561 Cr (-3.85%) QoQ
9 months ending 7,427 Crs vs 6,524 Cr (13.84%)
EPS (in Rs) 4.30
4.17 YoY | 4.29 QoQ
9 months ending EPS: 12.55 vs. 10.83
View: Average result and slightly below expectation. YoY and QoQ revenue increased marginally and profit declined in YoY and QoQ.
Business Updates & Highlights
IT Services Segment Revenue (including BFSI, Health BU, CBU, ENU, Tech Mfg etc.) was at $2,094.8 million, a sequential growth of 2.2%.
IT Services Operating Margin for the quarter was at 18.4%, an increase of 0.3% QoQ and down 1.4% in YoY (Negative). Q3FY20 operating profit is around INR 2,723 Cr Vs. 2,866 Cr in Q3FY19 therefore down by 5.5% in YoY and Q2FY20 operating profit is around INR 2,673 Cr therefore up by 1.9% QoQ
The Effective Tax Rate for Q3’20 was 20.0% vs 18.3% in Q2’20 and 21.5% in Q3’19.
Company has free cash flow of around INR 2,470 Cr in Q3FY20 Vs. 2,949 Cr in Q3FY19 Vs. 2,145 Cr in Q2FY20.
The firm’s revenue received a boost as it completed the acquisition of International TechneGroup Incorporated, a U.S.-based digital engineering company, in October 2019 for $45 million
Added 4 accounts to the >$100mn+ bucket YoY. Localization in US now at 70%. No. of new customers is 77. Top 5 customer contributed around 12.3% of their total revenue and top 10 customers contributed 19.2% of their revenue.
Digital now at 39.8%, grew 22.8% YoY in CC terms.
*The Board of Directors in their meeting held on January 14, 2020, declared an interim dividend of INR 1 per share*
ROE and ROCE is around 19% and 20% respectively and book value per share is around INR 75 per share and share is currently trading at 3.4x of its book value. Company is currently trading at annualized PE of around 16 which is fair as per Industry benchmark. Promoter holding in the company is around 74% which is too strong, FIIs, Insurance cos and mutual fund hold around 8.4%, 5% and 1.3% respectively.
*View*: Share price high 301 and now 257. Wipro is an Indian multinational corporation that provides information technology, consulting and business process services. In 2013, Wipro separated its non-IT businesses and formed the privately owned Wipro Enterprises. Wipro is third largest software exporter company in India. Company has good corporate governance in practice and follow high standard mechanism. *Company forecast its third-quarter IT services revenue at $2,065-$2,108 million, implying a sequential growth of 0.8-2.8 percent*
Current share is range bound between 248 to 265 level. Strong support level is INR 240 level. Long term investor can continue with the company.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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