WIPRO LTD - Q3 FY 21 - RESULTS ANALYSIS

 

WIPRO LTD

Q3 FY 21 RESULTS ANALYSIS

Highlights of the Results

 

Wipro (in Rs. Cr.)	Dec '20	Sep '20	Jun '20	Mar '20	Dec '19	YOY	QOQ
Total Income	15670	15097	14923	15751	15471	1.29	3.8
Employees Cost	8,276.90	8,316.80	8,026.20	8,544.80	8,238.10	0.47	-0.48
Other Income	654.1	554.7	648.6	590	609.7	7.28	17.92
P B T	3,840.30	3,207.90	3,092.20	2,964.50	3,076.00	24.85	19.71
Tax	852.6	722.9	683.8	620.6	616.4	38.32	17.94
Net Profit	2,987.70	2,485.00	2,408.40	2,343.90	2,459.60	21.47	20.23
FINAL NPT	2,968.00	2,465.70	2,390.40	2,326.10	2,455.90	20.85	20.37
Equity	1,143.10	1,143.00	1,142.90	1,142.70	1,142.60	0.04	0.01
Basic EPS	5.21	4.33	4.2	4.09	4.31	20.88	20.32
Diluted EPS	5.17	4.32	4.19	4.08	4.3	20.23	19.68

 

MP  444.85

PE   21.51

VOLUME : 2637164

Gross Revenue was ₹156.7billion , an increase of 3.7% QoQ and 1.3% YoY

Non-GAAP2 constant currency IT Services Segment Revenue increased by 3.4% QoQ

IT Services Operating Margin3for the quarter was at 21.7%, an expansion of 243bps QoQ and 329 bps YoY

Net Income for the quarter was ₹29.7billion , an increase of 20.8%YoY

Earnings Per Share for the quarter was at ₹5.21($0.071), an increase of 20.7% YoY

Operating Cash Flow was at ₹44.3billion ($607million1),which is149.4% of Net Income

Wipro declared an interim dividend of ₹1 ($0.0141) per equity share/ADS

Thierry Delaporte  CEO and Managing Director said

“Wipro has delivered a second consecutive quarter of strong performance on order booking, revenue and margins. Five of our sectors grew over 4% sequentially. We closed our largest  ever  deal  win  in  Continental  Europe. The  demand  environment  is steadily  improving,  especially  for digital transformation, digital operations, and cloud services. I am also pleased to share with you that we have moved into our new organization structure and are stabilizing quickly.”

Jatin  Dalal,  Chief  Financial  Officer  said, “Our margins  are  now at  a  22  quarters high.  The expansion  was  led  by improved revenue growth trajectory and excellence in operations with several metrics at an all-time high. Our Operating Cash Flows grew by 45%YoYwith a significant improvement in outstanding receivables.”

Outlook for the quarter ending March31, 2021We expect Revenue from our IT Services business to be in the range of $2,102million to $2,143million*. This translates to a sequential growth of 1.5% to 3.5%.

 

"A total of 23.75 crore equity shares were bought back under the buyback at a price of Rs 400 per equity share...The total amount utilized in the buyback is Rs 9,500 crore," Wipro said.

 

The growing acceptance of remote delivery of services is providing a new operating lever for Indian IT: offshoring. Distance has become less of a problem, Thierry Delaporte, chief executive officer and Managing Director, Wipro Ltd, said in an earnings call.

The offshore effort mix at Infosys Ltd rose to highest levels in more than a decade last quarter. Wipro’s offshore revenues as a percentage of total revenues are possibly the highest in its reporting history, point out analysts at JM Financial Institutional Securities Ltd.

 

Revenue : $2.07 B

Sequential Growth :3.9%

Constant Currency : 3.4%

Operating Margin : 21.7%

Composition Of Revenue

BFSI :30.5%

Communications : 5.2%

Consumer : 16.4%

Energy, Natural Resources, Utilities : 13.1%

Health : 13.9%

Manufacturing : 8.3%

Technology : 12.6%

Geographic distribution :

Americas : 57.6%

Europe : 25.2%

Rest of world : 17.2%

Revenue Guidance : QoQ Growth : 1.5% to 3.5%

Q4 $2,102 Mn to $2,143 Mn

customer concentration : Top 1 :3.1% ; Top 5 :11.9%; Top 10 : 18.9%

Total head Count : 1,90,308

Attrition Vol-TTM : 11%

Gross Utilization : 74.8%

Off Shore revenue : 52.7%

Cash Flow Metrics for the quarter :

Operating Cash Flow : 149.4% of Net Income

Free Cash Flow is at 132.7% of Net Income

Other highlights for the quarter

1. Secular growth across all Service Lines & Business Units. 5 out of 7 Business unit grew over 4% sequentially

2. We closed 12 deals with > $30Mn TCV and the TCV booked of these deals was over $1.2Bn

3. We also closed our largest deal in Continental Europe with Metronom

4. Hired about 14,000 employees which includes onboarding of more than 2,900 freshers in Q3’21

5. Declared an interim dividend of ₹1 ($0.0141) per equity share/ADS

 

 

 

 

 

IT Products

IT Products Segment Revenue for the quarter was ₹1.6 billion ($21.3million)

IT Products Segment Results for the quarter was a profit of ₹0.09billion ($1.2million1)India business from State Run Enterprises (ISRE)

India SRE Segment Revenue for the quarter was ₹2.4billion ($32.8million1)

India SRE Segment Results for the quarter was a profit of ₹0.47billion ($6.5million1)

1. For the convenience of the readers, the amounts in Indian Rupees in this release have been translated into United States Dollars at the certified foreign exchange rate of US$1 = ₹73.01, as published by the Federal Reserve Board of Governors on December 31, 2020. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2020 was US$1= ₹74.04

2. Constant currency revenue for a period is the product of volumes in that period times the average actual exchange rate of the corresponding comparative period

3. IT Services Operating Margin refers to Segment Results Total as reflected in IFRS financials

IT Services

Wipro continued its momentum in winning large deals with our customers as described below:

 Wipro has secured a contract for the upstream and downstream business of a UK-based energy company to transform their existing application maintenance services to a DevOps model, aligned with their new digital organization. This will enable the client to be more agile and respond swiftly to the changing business demands while ensuring cost optimization.

 Wipro has won an engagement with a global new-age technology corporation to provide B2B customer and technology support for their business communication platform. Wipro will also provide account review services to determine any unauthorized access, and offer Quality as a Service (QaaS) to the client.

 Wipro has won an engagement with a US-based public relations and media services company to streamline its operations across US, Canada, UK, Europe, India, and APAC, in addition to consolidating its supplier base.

 Wipro has secured a contract from a large US-based telecom service provider to manage their sales support and sales request functions for the order management process. As part of the engagement, Wipro will bring about technology transformation to reduce the cycle time for order processing, ensuring faster deployment of services.

 A global energy corporation has awarded Wipro a multi-year contract to provide digital services. The engagement includes support and development of business and enterprise applications for the upstream, midstream and downstream lines of business and corporate functions of the company.

Digital & Cloud Application Services Highlights

We continue to see increasing traction in digital oriented deals as illustrated below:

 A global beverage company has selected Designit, a Wipro company, to support a new product and service in the area of public and semi-public vending. Designit will analyze market and consumer insights and create vision concepts for the launch.

 A US-based network software provider has awarded Wipro a contract to co-develop their 5G Radio Unit product and variants for global markets. The deal encompasses system architecture, software/hardware design, development, integration and validation to enable the customer achieve faster and cost-effective time-to-market.

 A European multinational manufacturing company has awarded Wipro a contract to provide cloud managed services, application testing platforms and managed security services. Wipro will provide innovative solutions forCloud access security, application security and vulnerability management using AI-based orchestration & automation.

 Wipro’s crowd sourcing platform Topcoder has won an engagement with a leading US-based pharma- ceutical company to provide on-demand digital talent and development capability to their R&D Data Science Team. As part of the engagement, Topcoder's Platform and Data Science Community was leveraged to validate a COVID prediction model, operationalize it for use with customer data, and develop visualizations for the effort, all in under four weeks. The client had worked with Topcoder in June 2020 to plan for COVID vaccine trials.

Analyst Recognition

 Wipro was positioned as a Leader in Gartner Magic Quadrant for Managed Network Services, Ted Corbett, Lisa Pierce, Danellie Young et al., 9 Nov 2020

 Wipro was positioned as a Leader in IDC MarketScape Asia/Pacific Salesforce Implementation Services 2020

Vendor Assessment (Doc #AP46211420, Nov 2020)

 Wipro was positioned as a Leader in IDC MarketScape Worldwide Life Science Sales and Marketing Digital Transformation 2020 Vendor Assessment (Doc #US42724918, Dec 2020)

 Wipro was recognized as a Leader in IDC MarketScape GCC Professional Security Services 2020 Vendor Assessment (Doc #META47033220, Dec 2020)

 Wipro was positioned as a Leader in IDC MarketScape Worldwide Retail Commerce Platform Service Providers 2020 Vendor Assessment (Doc #US46162920, Dec 2020)

 Wipro was positioned as a Leader in Everest Group’s System Integrator (SI) Capabilities on Amazon Web Services (AWS), Microsoft Azure Services and Google Cloud Platform (GCP) Services PEAK Matrix®

Assessments 2021

 Wipro was recognized as a Leader and Star Performer in Everest Group’s Application and Digital Services (ADS) in Life and Annuities (L&A) Insurance PEAK Matrix® Assessment 2021

 Wipro was recognized as a Leader in Everest Group’s Artificial Intelligence (AI) Services PEAK Matrix®

Assessment 2021

 Wipro Ranks #2 for Customer Satisfaction in Whitelane 2020 French IT Sourcing Study

The Company is organized into the following operating segments: IT Services, IT Products and India State Run Enterprise segment (ISRE).

IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals.

The industry verticals are as follows: Banking, Financial Services and Insurance (BFSI), Health Business unit (Health BU), Consumer Business unit (CBU), Energy, Natural Resources & Utilities (ENU), Manufacturing (MFG), Technology (TECH) and Communications (COMM). Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.

IT Products: The Company is a value-added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.

India State Run Enterprise segment (ISRE): This segment consists of IT Services offerings to entities/ departments owned or controlled by the Government of India and/ or any State Governments