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SYNOPSIS

Wipro is 4th largest Company in the world

in terms of market capitalization in IT

services.

During the quarter ended, the robust

growth of revenue is increased by 27.69%

to Rs. 99972.00 million.

Wipro Technologies has launched its

proprietary Wipro Marketing Mix

Modeling (MMM) technology solution on

Amazon Cloud.

Wipro Technologies has launched 'Wipro

SprintHR', used to deploy Oracle Fusion

Human Capital Management.

Wipro Technologies awarded with

NASSCOM Award for Excellence in

Diversity and Inclusion for Best IT

Services and Product Companies.

Wipro Technologies has launched 'FLoW'

an Oracle-based Pricing, Supply Chain &

Finance Management Solution for the

retail sector.

The Company’s revenue and PAT are

expected to grow at a CAGR of 17% and

13% over FY10 to FY13E respectively.

Years Net sales EBITDA Net Profit EPS P/E

FY 11 310987.00 72531.00 52977.00 21.59 19.41

FY 12E 381527.60 84290.53 56855.64 23.17 18.08

FY 13E 438756.74 96838.06 65731.93 26.79 15.64

Stock Data:

Sector: IT

Face Value Rs. 2.00

52 wk. High/Low (Rs.) 490.15/310.20

Volume (2 wk. Avg.) 162000.00

BSE Code 507685

Market Cap (Rs in mn) 1048695.7 Share Holding Pattern

As on Dec 11

79.15

5.74

3.6311.48

Promoters

FIIs

DIIs

Others

1 Year Comparative Graph

Wipro Ltd. BSE SENSEX

C.M.P: Rs.425.00 Target Price: Rs. 490.00 Date: Feb. 02nd 2012 BUY

WIPRO LTD. Result Update: Q3 FY 12

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Peer Group Comparison

Name of the company CMP (Rs.) Market Cap. (Rs. mn.)

EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

Wipro Ltd. 425.00 1048695.7 21.59 19.41 4.30 200.00

TCS 1096.75 214658.21 53.99 20.31 11.02 1400.00

Infosys 2659.75 152727.93 129.58 20.53 6.23 1200.00

HCL Tech 420.50 29097.56 23.25 180.19 4.97 375.00

Investment Highlights

� Q3 FY12 Results Update

Wipro Ltd has posted a consolidated result for the quarter ended December 31,

2011. During the quarter, the company has posted a net profit of Rs 14564.00

million for the quarter ended December 31, 2011 as compared from Rs 13188.00

million for the quarter ended December 31, 2011, rise of 10.43%. Net sales are

surged by 27.69% to Rs. 99972.00 million from Rs.78293.00 million same quarters

last year. Company posted earnings of Rs. 5.93 a share during the quarter,

registering 10.23% increment over prior year period.

Quarterly Results - Consolidated (Rs. in mn)

As At Dec-11 Dec-10 %change

Net sales 99972.00 78293.00 27.69%

PAT 14564.00 13188.00 10.43%

Basic EPS 5.93 5.38 10.23%

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� Net Sales & PAT growth

During the quarter, Net Sales rose by 27.69% to Rs. 99972.00 million from

Rs.78293.00 in the same the quarter last year and the Total Profit for quarter ended

December 2011 was Rs.14564.00 million grew by 10.43% from Rs.13188.00 million

compared to same quarter last year.

Net Sales & PAT

0.00

20000.00

40000.00

60000.00

80000.00

100000.00

120000.00

Va

lue

in

Rs.

mn

Net Sales 78293.00 99972.00

PAT 13188.00 14564.00

Q3 FY11 Q3 FY12

� EPS

Due to increase in equity capital the basic EPS of the company stood at Rs. 5.93

for the quarter ended Dec. 2011 from Rs. 5.38 for the quarter ended Dec. 2010.

EPS

5

5.2

5.4

5.6

5.8

6

EPS 5.38 5.93

Q3 FY11 Q3 FY12

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� Break up of Expenditure

� Segment Revenue

Pariculars Q3 FY12 (Rs. mn) IT Services 76076.00 IT Products 9000.00 Consumer Care & Lighting 8787.00 Others 5760.00

Total 99623.00

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� Wipro launches 'FLoW', a Technology Solution for the Retail Sector

Wipro Technologies has launched, a Technology 'FLoW' an Oracle-based Pricing,

Supply Chain and Finance Management Solution, for the retail sector. It will provide

retail franchises and wholesalers greater data visibility needed for faster and more

accurate trading transactions. This is a composite solution to the Oracle Retail

Merchandising System (RMS), developed in line with result of customer feedback.

� Wipro launches Marketing Mix Modeling Solution on Amazon Cloud

Wipro Technologies has announced the launch of its proprietary Wipro Marketing Mix

Modeling (MMM) technology solution on Amazon Cloud. MMM helps in determining

the marketing of ROI and impact on sales by statistically analyzing activities like

price change, advertising, media delivery and promotions.

� Partners with VendorNet to provide retailers next gen omni-channel

Wipro Technologies has entered into a strategic partnership with VendorNet to solve

retailers' challenges when it comes to synchronizing channels and having a single

cross-channel view of inventory. The collaboration involves the resale and integration

of VendorNet Commerce Suite with Wipro's ENCORE e-commerce platform and will

help retailers overcome organizational and cultural roadblocks inherent to the

adoption of an omni-channel business model. The combined Wipro and VendorNet

solutions will provide retailers with a true view of all their sales and fulfillment

channels to enable a buy anywhere, anytime customer experience.

� Wipro launches ‘Wipro SprintHR’ with Oracle

Wipro Technologies has announced the launch of 'Wipro SprintHR', a cloud based

technology offering used to deploy Oracle Fusion Human Capital Management. It is

available as a SaaS model and is designed to help enable enterprise customers

transform their HR processes. Leveraging its strong relationship with Oracle and co-

development experience on Oracle Fusion Applications, Wipro SprintHR helps

significantly reduce cost and deployment timelines.

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� Awarded NASSCOM Corporate Awards for Excellence

Wipro Technologies was awarded the prestigious NASSCOM Award for Excellence

in Diversity and Inclusion, in the category - Best IT Services & Product Companies.

The awards recognizes that the "culture of inclusion" has become a business

imperative and recognition of these awards are sought after by companies, to

enhance their positioning amongst the most desirable employers in the country.

� Revenue Composition (Q3 FY12)

Revenue Composition (%)

15%

28%

19%

10%

13%

15%

Global Media & Telecom

Financial Solutions

Manufacturing & Hitech

Healthcare & Services

Retail & Transportation

Energy & Utilities

� Geography Composition (Q3 FY12)

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� Service Line Distribution (Q3 FY12)

� Customer Concentration

Customer Concentration

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Top Customer 3.10% 3.30% 3.70% 3.90%

Top 5 11.40% 10.90% 11.60% 11.80%

Top 10 19.70% 19.40% 20.00% 19.90%

Q4 FY11 Q1 FY12 Q2 FY12 Q3 FY12

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� Onsite/Offshore Revenue

Onsite/Offshore Revenue Mix ($mn)

0

100

200

300

400

500

600

700

Va

lue

in

mn

Onsite 523 548 595 621

Offshore 499 498 500 521

Q4 FY11 Q1 FY12 Q2 FY 12 Q3 FY 12

� Head Count

Head Count

115000

120000

125000

130000

135000

140000

Headcount 122385 126490 131730 136734

Q4 FY11 Q1 FY11 Q2 FY12 Q3 FY12

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Company Profile Wipro Limited is the first PCMM Level 5 and SEI CMM Level 5 certified IT Services Company globally. In the Asia Pacific and Middle East markets, Wipro provides IT solutions and services for global corporations. Wipro’s ADSs are listed on the New York Stock Exchange, and its equity shares are listed in India on the Stock Exchange, Mumbai and the National Stock Exchange, among others. Wipro Ltd provides comprehensive information technology (IT) solutions and services, including systems integration, information systems outsourcing package implementation, software application development and maintenance, and research and development services to corporations globally through its IT services, solutions and products division. The following are the different verticals where Wipro is working:

• Aerospace, Defense & Satellite • Automotive Electronics • Automotive IT • Broadband & Optical Networks • Chemicals • Computing Peripherals • Computing Platforms • Consumer Electronics • Consumer Packaged Goods • Distribution • Energy • Finance • Health Science • High Technology • IP Multimedia Networks

• Industrial Automation • Insurance • Manufacturing • Media & Entertainment • Medical Devices • Mobile Devices • Retail • Semiconductors • Software Products Group • Storage Technologies • Telecom - Equipment Vendors • Telecom - Service Providers • Travel & Transportation • Utilities • Wireless Networks & Devices

Alliances The company has alliance with the following companies:

• Actuate • Amber Point • Aprision • Ariba • ARM • Artisan • ATG • Autonomy • Axiom • BEA • Blue Titan • Business Objects • Cape Clear • Cognos • Cisco • Computer Associates • Data Flux

• Data Foundations • DSPA • Embedded Linux Consortium • FileNet • GXS • HP • Hyperion • Subex • UMC • CEVA • JDA • Hyundai • IBM • Informatica • Interwoven ITKO • Magic Software • Microsoft

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• Nortel • Obilcore • OM Partners • Oracle • PeopleSoft • Real Time Image • RSA • SAS • SAP • Siebel

• Sun • Tibco • Vignette • Web Methods • Zafin Labs • Sterling Commerce • Getronics • TSMC • ATG • Selectica

Subsidiaries

• Wipro Infrastructure Engineering Ltd. • Wipro Inc. • C Mango Pte Ltd. • Wipro Japan KK. • Wipro Shanghai Ltd. • Wipro Trade Marks Holding Limited. • Wipro Travels Services Ltd. • Wipro Consumer Care Ltd • Wipro Cyprus Private Ltd. • Quantech Global Services Ltd. • Wipro Austrial Pty Ltd. • 3D Networks Pte Ltd. • Spectra mind Inc. • Wipro Chandrika Ltd. • Infocrossing

Services The company services are divided into five. They are as follows:

1. IT services 2. Product Engineering Solutions 3. Technology Infrastructure Services 4. Business Process Outsourcing 5. Consulting Services

Services

IT Services

Product

Engineering

Technology

Infrastructure

Services

BPO Services

Consulting Services

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Financial Results

12 Months Ended Profit & Loss Account (Consolidated)

Value (Rs.in.mn) FY10 FY11 FY12E FY13E

Description 12m 12m 12m 12m

Net Sales 271241.00 310987.00 381527.60 438756.74

Other Income 4360.00 6652.00 8817.90 9964.23

Total Income 275601.00 317639.00 390345.50 448720.97

Expenditure -211899.00 -245108.00 -306054.97 -351882.91

Operating Profit 63702.00 72531.00 84290.53 96838.06

Interest -991.00 -1933.00 -3993.15 -4512.26

Gross profit 62711.00 70598.00 80297.38 92325.80

Deprecation -7831.00 -8211.00 -10196.20 -11419.74

Profit Before Tax 54880.00 62387.00 70101.18 80906.06

Tax -9294.00 -9714.00 -13511.20 -15453.06

Profit After Tax 45586.00 52673.00 56589.99 65453.00

Minority interest -185.00 -344.00 -183.20 -192.36

Share of Profit & Loss of Asso. 530.00 648.00 448.85 471.29

Net Profit 45931.00 52977.00 56855.64 65731.93

Equity capital 2936.00 4908.00 4908.00 4908.00

Reserves 196291.00 233938.00 290527.99 355980.99

Face value 2.00 2.00 2.00 2.00

EPS 31.29 21.59 23.17 26.79

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Quarterly Ended Profit & Loss Account (Consolidated)

Value (Rs.in.mn) 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12E

Description 3m 3m 3m 3m

Net sales 85640.00 90945.00 99972.00 104970.60

Other income 2192.00 2113.00 2149.00 2363.90

Total Income 87832.00 93058.00 102121.00 107334.50

Expenditure -68350.00 -73547.00 -80129.00 -84028.97

Operating profit 19482.00 19511.00 21992.00 23305.53

Interest -760.00 -1250.00 -1017.00 -966.15

Gross profit 18722.00 18261.00 20975.00 22339.38

Depreciation -2338.00 -2520.00 -2604.00 -2734.20

Profit Before Tax 16384.00 15741.00 18371.00 19605.18

Tax -3096.00 -2841.00 -3810.00 -3764.20

Profit After Tax 13288.00 12900.00 14561.00 15840.99

Minority interest -49.00 10.00 -114.00 -30.20

Share of Profit & Loss of Asso 110.00 99.00 117.00 122.85

Net Profit 13349.00 13009.00 14564.00 15933.64

Equity capital 4911.00 4915.00 4916.00 4916.00

Face value 2.00 2.00 2.00 2.00

EPS 5.44 5.29 5.93 6.48

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Key Ratios

Particulars FY10 FY11 FY12E FY13E

No. of Shares (in Million) 1468.00 2454.00 2454.00 2454.00

EBITDA Margin (%) 23.49% 23.32% 22.09% 22.07%

PBT Margin (%) 20.23% 20.06% 18.37% 18.44%

PAT Margin (%) 16.81% 16.94% 14.83% 14.92%

P/E Ratio (x) 13.39 19.41 18.08 15.64

ROE (%) 22.88% 22.05% 19.15% 18.14%

ROCE (%) 27.33% 27.68% 26.93% 25.83%

Debt Equity Ratio 0.31 0.22 0.19 0.16

EV/EBITDA (x) 9.66 14.18 12.20 10.62

Book Value (Rs.) 135.71 97.33 120.39 147.06

P/BV 3.09 4.30 3.48 2.85

Charts:

Net sales & PAT:

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4

P/E Ratio(x):

Debt Equity Ratio:

1

5

EV/EBITDA(x):

P/BV:

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Outlook and Conclusion

� At the current market price of Rs.425.00, the stock is trading at 18.08 x

FY12E and 15.64 x FY13E respectively.

� Earning per share (EPS) of the company for the earnings for FY12E and FY13E

is seen at Rs. 23.17 and Rs. 26.79 respectively.

� Net Sales and PAT of the company are expected to grow at a CAGR of 17% and

13% over 2010 to 2013E respectively.

� On the basis of EV/EBITDA, the stock trades at 12.20 x for FY12E and 10.62 x

for FY13E.

� Price to Book Value of the stock is expected to be at 3.48 x and 2.85 x

respectively for FY12E and FY13E.

� We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.490.00 for Medium to Long term investment.

Industry Overview

Over the past few years, the Indian information technology (IT) and IT enabled Services

(ITeS) industry has been on a steady growth trajectory. The IT industry, alone, has

played a pivotal role in placing India on the world map as a major knowledge-based

economy and outsourcing hub. The major sub-segment, that entails Business Process

Outsourcing (BPO), is re-inventing itself and experiencing a paradigm shift from being

a volume-oriented proposition to a value-oriented proposition by expanding its scope

of services and providing substantial high-end solutions in the areas of Data Analytics,

Legal Process Outsourcing, etc.

The number of internet users in India crossed the 100-million mark in September

2011, growing 13 per cent over last year's figure of 87 million, according to the latest

report of the Internet and Mobile Association of India (IAMAI) co-prepared with

research firm IMRB. The study anticipates India's internet population to grow to 121

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million by December 2011. Further, the country's broadband subscriber base stood at

12.69 million in August 2011, according to data released by the Telecom Regulatory

Authority of India (TRAI).

Competitive Landscape

After personal computers (PCs) and laptops, tablets are mushrooming as a major

competitive avenue wherein vendors are striving hard to launch more affordable

devices for the Indian market. Second quarter of 2011experienced the release of the

iPad2 in India in less than 50 days after its US launch while Samsung is scouting for

40 per cent share of the Indian tablet market in 2011.

In the enterprise software segment, US giant Oracle claims to cater around 7,000

clients across the Indian government and private sectors; recent wins being Punjab

National Bank (PNB) - India's second-largest public sector bank and Hindustan

Petroleum Corporation (HPCL) - another Indian public sector organ. Meanwhile, Indian

IT companies like Wipro, Infosys, TCS, HCL and Mahindra Satyam are developing their

technologies to entail cloud computing applications and solutions for various

segments ranging from financial services and banking to manufacturing.

IT & ITeS - Key Developments and Investments

Between April 2000 and August 2011, the computer software and hardware sector

received cumulative foreign direct investment (FDI) of US$ 10,787 million, according to

the Department of Industrial Policy and Promotion (DIPP).

• Monster India has launched an online campus hiring initiative - 'Monster

College' – wherein it will collaborate with educational institutions across India

and connect them with over 20,000 employers for campus placements.

• Investor Relations Global Rankings (IRGR), a New York-based organization, has

ranked Technology giant Infosys as the country's best company for corporate

governance practices, financial disclosure procedures, IR website and online

annual report. There were more than 80 companies that registered themselves

for the rankings.

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• Tower infrastructure company Indus Tower is looking for a partner to provide

end-to-end IT solutions and Indian tech-biggies like Infosys, IBM and Wipro are

in discussions with the former for the same. The contract, potentially in the

range of Rs 2,430-2,916 crore (US$ 500-US$ 600 million), would involve areas

such as infrastructure management, application development and other related

managed services and would span for 8-10 years. Indus Tower, a joint venture

firm between Bharti Group, Idea Cellular and Vodafone Essar, owns 110,000

towers and operates 16 out of the 22 telecom circles.

• Google, with its partner web hosting firm HostGator, has announced that it will

offer free web domain names to small and medium businesses (SMBs) in India

in order to boost internet usage in Asia's third largest economy. The company

will maintain the websites for a year without any charges and at the end of the

first year, users will be asked to pay a nominal fee if they wish to renew their

domain name. India is shelter to around 8 million SMBs of which about

400,000 have a website and 100,000 have active online presence, said Google.

Hence, the market poses a great potential for growth.

Cloud Computing – The Emerging Technology

The model of cloud computing has attracted attention of organizations of all sizes as

the technology offers lower operational costs, scalability and mobility at every level.

Indian companies are increasingly adopting 'hybrid cloud' (a mix of private and public

cloud) to address their concerns of data privacy as well.

Indian businesses and government agencies are expected to create huge demand for

guidance in the usage of cloud computing services. There are already more than 50

cloud computing service providers in the Indian market. Meanwhile, Indian internet

services providers (ISPs) and data centre service providers including Bharti Airtel, Sify,

Trimax, and NetMagic are investing applications and bandwidth to support new cloud

service offerings.

NTT Communications Corp plans to invest US$ 1.58 billion in Europe and India over

2011-15 to develop its cloud computing business at a faster pace while AWS, the

world's largest cloud-based service provider, that forms about 2 percent of Amazon's

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revenues, is projected to become the online retail giant's next most-profitable business

in India.

Soaring e-Commerce

The US$ 10 billion Indian e-commerce market is expanding exponentially (it grew 47

per cent in 2011 to reach the present size) as rising internet penetration is making

customers buy more and more stuff online. Investors are also betting high in the

industry; they poured around US$ 200 million into Indian e-commerce start-ups in

last couple of years.

As a result of such growth, e-retailers, who want to focus on their core functionalities,

are expected to outsource bulky back-end operations (such as customer care, order

processing, invoice processing, finance and accounts et al) and emerge as a

substantial source of revenue to BPOs.

Retail brands are expected to bring a great transformation in online space. Women's

apparel retail brand Biba and tyre brand Bridgestone have become available online

recently. IAMAI expects online advertising to increase by 30-40 per cent in 2011-12 on

back of increased internet usage by retailers.

Government Initiatives

The government of India is leaving no stone unturned to accelerate growth of IT & ITeS

sector in the country. Earlier in 2011, the ministry had revealed its intentions to

launch e-governance initiatives that would facilitate rolling out mobile governance and

electronic service delivery bill.

Sufficient funds have also been earmarked to connect Indian villages and classrooms

across the country with knowledge centres wherein the government aims to provide

broadband connectivity to all the village panchayats by 2012.

Mr Sachin Pilot, Minister of State for Communications and IT believes that broadening

connectivity in such a manner would improve the way government interacts with

people.

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Further, the Ministry of Communications and Information Technology has revealed its

intentions to attract higher investments for IT sector in smaller cities and make

software services sector grow more than three times to US$ 300 billion by 2020. The

government also wants to increase the IT exports from US$ 59 billion currently to US$

200 billion by 2020. The projections and focus areas were laid in a draft national

policy which also stated that the government will endorse innovation, research and

development (R&D) in advanced technologies and application development in areas

such as cloud computing, mobile value-added services and social media.

The policy also aimed at employing additional 10 million skilled people in the

information communication technology sector. The sector currently has manpower

strength of 2.5 million skilled people.

IT & ITeS in India - Road Ahead

The Indian market for IT products and services is expected to consolidate its growth

achieved in 2010 and increase from US$ 19.7 billion in 2010 to US$ 41.2 billion by

2015, according to India Information Technology Report for the third quarter of

2011by Business Monitor International (BMI). BMI estimates that the Indian market

for PCs (including notebooks and accessories) will be worth around US$ 8 billion in

2011, higher from US$ 6.8 billion in 2010 while it projects IT services market at

around US$ 7.5 billion in 2011 which would further swell to a size of US$ 16.9 billion

by 2015. The report has estimated a compounded annual growth rate (CAGR) of 18

per cent for Indian software market over the span of 2011-2015.

_______________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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