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Wipro Ltd. (Wipro) | Q3FY14 Result Update




IndiaNivesh Securities Pvt Ltd


19 Jan 2014





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Wipro Ltd. (Wipro) | Q3FY14 Result Update In-line Q4FY14 $-rev Guidance; Maintain BUY | TP revised upward to Rs.611 Q3FY14 Results Highlights: Wipro Ltd (Wipro) Q3FY14 performance was mixed-bag on all fronts. IT services $-Revenue grew by 2.9% Q/Q to $1,678 mn (INSPL est $1,665 mn) led by Global IT, BPO, Infocrossing and IMEA segments. Consolidated rupee revenue went up 3.1% Q/Q to Rs.113 bn (v/s Rs.95.9 bn in Q2FY14) driven by IT services (+2.6% Q/Q) and System & Services/Products (+8.3% Q/Q). During the quarter, EBIT grew by 4.4% Q/Q to Rs.23.4 bn on back of IT Services EBIT (+5.1% Q/Q), partially offset by EBIT level loss in System & Services/Product and others segments. The consolidated EBIT margin expanded 27 bps Q/Q to 21% (v/s 20% in Q2FY14). IT Services EBIT margin expanded 54 bps Q/Q to 23% (v/s 22% in Q2FY13). Interest Charge/other income during the quarter stood at Rs.898 mn/Rs.3,812 mn (v/s Rs.656mn/Rs.3412mn in Q2FY14), respectively. The company’s tax rate stood at 23% which led to tax outgo of Rs.6,060 mn (v/s 5,754 mn in Q2FY14). During the quarter, Wipro reported net forex gain of Rs. 604 mn. Net profit went up 4.4% Q/Q to Rs20.2 bn, which was slightly below INSPL est. of Rs.20.9bn. Adjusting other income & forex, net income went up 2.8% Q/Q to Rs16.5 bn (v/s Rs.13.1 bn in Q2FY14). Valuations: At CMP of Rs.552, the stock is trading at P/E multiple of 18.1x FY14E and 15.3x FY15E revised earnings estimate. Fourth quarter FY14 $-revenue guidance remains the positive surprise. Further, uptake in discretionary budget and slight revival in global economy could lead to outperformance. Wipro's re-organization to reduce overlaps, improve deals flow started paying in the form of $-revenue growth. We maintain BUY and revise our target price upward to Rs.611 [valuing at 17.0x FY15e] from Rs.546

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