wipro ltdjuly 18, 2019 -...

ICIC

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Retail E

quit

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esearch

Result

Update

July 18, 2019

CMP: | 267 Target: | 315 (18%) Target Period: 12 months

Wipro Ltd (WIPRO)

BUY

Growth acceleration to drive margin further…

Wipro’s results were better than our expectations on the margin front.

Further, digital (37.4% of revenue) grew at a healthy 5.6% QoQ, 36.9% YoY

in the quarter. Another highlight was the company added three accounts in

$100 million+ revenue bucket. We expect growth to accelerate in FY21E

with room for margin revision upwards from 18.3% estimated in FY21E.

Digital story & execution pick up to ramp up growth in FY21E

IT services revenue de-grew 0.7% sequentially in constant currency. The

revenue de-growth in Q1 and conservative revenue guidance for Q2FY20E

(0-2% QoQ) was due to deferral of some deals and slower ramp ups of some

projects. The impact of the same was most noticeable in the consumer

business unit segment wherein revenues declined 4.4% QoQ. In addition,

softness in capital markets and weakness in European banks continued to

impact banking & financial services, similar to TCS & Infosys. Going forward,

the consumer segment is expected to revive from Q2 onwards based on

deal pipeline. Further, communication & technology segment is expected to

continue its momentum. Along with this, we believe digital story

acceleration & pick up in execution would result in healthy growth in FY21E.

Digital to be key driver for growth

Digital portion in overall revenue pie continued to rise (37.4% of revenue in

Q1FY20 vs. 28% in Q1FY19). Digital was the main revenue contributor in the

quarter with growth of 5.6% QoQ and 36.9% YoY. The same is expected to

be the main growth driver for the company, going ahead.

Better than expected margin, ~18% margin looks sustainable

IT services EBIT margin came in better than our estimate at 18%. Though

margins in Q2FY20E are expected to be impacted due to wage hikes, we

expect margins to recover from Q2FY20E onwards. We expect IT services

EBIT margin of 18.1%, 18.3% in FY20E, FY21E, respectively. However,

digital acceleration, recovery in high margin verticals and easing of pressure

in traditional services could result in upward revision of margins for FY21E.

Valuation & Outlook

The impact of client specific issues in FY19 has receded with a slow & steady

improvements starting to be seen. The improvement is expected to

progress further in FY21E. Accompanied by digital story & execution pick

up, this would lead to growth ramp up in the long term. Further, room for

margin revision, healthy capital allocation policy and reasonable valuation

compared to peers (~13x FY21E EPS) prompts us to maintain BUY on

Wipro. Hence, we maintain target price of | 315/share (~16x FY21E EPS).

Key Financial Summary

s

Key Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)

Net Sales 55,040 54,636 58,052 61,672 66,763 7.2%

EBITDA 11,458 10,542 11,938 12,695 15,040 12.2%

Net Profit 8,490 8,008 9,003 9,896 12,018 15.5%

EPS (|) 17.5 12.7 14.9 16.4 20.0

P/E 15.2 21.1 17.8 16.2 13.3

RoNW (%) 16.3 16.6 15.8 15.9 17.5

RoCE (%) 16.9 16.9 17.8 17.3 18.9

Source: Company, ICICI Direct Research

Particulars

Particular Amount

Market Capitalization (| Crore) 160,795.5

Total Debt (| Crore) 9,946.7

Cash and Investments (| Crore) 38,417.6

EV (| Crore) 132,324.6

52 week H/L 301/ 197

Equity capital 1,207

Face value | 2

Key Highlights

Digital with growth of 36.9% YoY in

Q1FY20 led the quarter growth

Digital growth and deal execution to

push growth in FY21E

Expect IT service margins in range of

~18% as sustainable.

Maintain BUY with a target price of |

315

Research Analyst

Devang Bhatt

[email protected]

Deepti Tayal

[email protected]

ICICI Securities | Retail Research 2

ICICI Direct Research

Result Update | Wipro Ltd

Exhibit 1: Variance Analysis EESes

Q1FY20 Q1FY20E Q1FY19 YoY (%) Q4FY19 QoQ (%) Comments

Revenue 14,716 14,656 13,978 5.3 15,006 -1.9

Slower-than-expected start is mainly due to

completion of some large programs and deferral of

certain projects

Employee expenses 10,427 10,396 10,035 3.9 10,426 0.0

Gross Margin 4,289 4,259 3,943 8.8 4,581 -6.4

Gross margin (%) 29.1 29.1 28.2 93 bps 30.5 -138 bps

Selling & marketing costs 1,095 1,079 1,081 1.3 1,099 -0.4

G&A expenses 812 696 861 -5.7 667 21.7

EBITDA 3,033 2,923 2,765 9.7 3,292 -7.9

EBITDA Margin (%) 20.6 19.9 19.8 83 bps 21.9 -133 bps

Depreciation 496 440 434 14.2 560 -11.4

EBIT 2,537 2,484 2,331 8.9 2,732 -7.1

EBIT Margin (%) 17.2 16.9 16.7 57 bps 18.2 -96 bpsIT services EBIT margin declined 20 bps to 18%

mainly on account of one month wage hike impact

Other income 536 451 355 51.2 470 14.2

PBT 3,074 2,935 2,686 14.4 3,202 -4.0

Tax paid 670 645 587 14.2 706 -5.2

PAT 2,387 2,315 2,121 12.6 2,483 -3.9

Key Metrics

Closing employee Count 174,850 173,000 160,846 8.7 171,425 2.0 Recruited 6000 graduates globally this quarter

TTM voluntary Attrition (%) 17.6 17.7 17.1 50 bps 17.6 0 bps

Utilisation ex trainees (%) 85.0 85.0 85.2 -20 bps 85.4 -40 bps

Average $/| 70.4 69.5 68.9 2.2 70.3 0.2


Exhibit 2: Change in estimates

FY19 Comments

(| Crore) Current Old New % Change Old New % Change

Revenue 58,052 62,929 61,672 -2.0 67,944 66,763 -1.7

EBITDA 11,938 13,370 12,695 -5.0 14,569 15,040 3.2

EBITDA Margin (%) 20.6 21.2 20.6 -62 bps 21.4 22.5 113 bps

Change in margin estimates on the back

of inclusion of ISRE margin impact.

Maintain our IT service margin estimates

PAT 9,003 10,449 9,896 -5.3 11,709 12,018 2.6

EPS (|) 14.9 17.4 16.4 -5.3 19.4 20.0 2.6

FY20E FY21E





Conference Call Highlights

Management guidance: Wipro has guided that its Q2FY20E IT services

revenues would be in the range of $2039 -2080 million, which translates

to 0-2% QoQ growth. The conservative guidance is on account of a

delay in certain projects while growth would progress as execution of

these deals picks up

Margins outlook: In Q1FY20, IT services EBIT margin declined 20 bps to

18%, though it was above our estimate of 17.4%. The margin decline

was possibly on account of one month wage hike impact. Adjusting for

other operating income, the EBIT margin was at 18.5%. Margins in

Q2FY20E are expected to be impacted by remaining salary increments

(two months impact) though it would be partly offset by onsite-offshore

mix and operational efficiency. Going ahead, margins in a narrow band

of 18% look sustainable. However, digital acceleration, recovery in high

margin verticals and pressure in traditional services coming down could

result in upward revision of margins for FY21E

Other verticals: Besides communication and technology vertical, other

segments reported a muted show. These two verticals are doing well

and are expected to continue the same, going forward. Weakness in

BFSI (31.6% of revenue) is mainly due to softness in capital markets and

weakness in European banks. The management expects this softness to

be temporary and improve as the year progresses. Decline of 4.4% QoQ

in consumer business unit was due to completion of some large projects

and deferral of some. However, it is expected to improve from Q2

onwards based on the deal pipeline. Healthcare & manufacturing

continue to be soft

Digital revenues: Digital business continues to ride on an upward

trajectory, comprising 37.4% of revenue (vs. 28% in Q1FY19) and grew

36.9% YoY in dollar terms

Employee details: The company's closing employee count was at

174,850. It recruited over 6000 graduates globally this quarter. Net

utilisation (ex-trainees) declined 40 bps QoQ to 85.0% due to fresher

hiring and people on bench due to anticipation of certain projects getting

ramped up. Voluntary attrition (TTM) remained flat QoQ at 17.6%. In

terms of visa concerns, Wipro has limited onsite risk as 65.4% of its

workforce in US are locals

Client update: Three clients were added in US$100 million+ bucket

taking the count to 13

Buyback: Upon approval from Sebi, the company intends to complete

the process of buyback of up to 32.3 crore equity shares at | 325 per

share for an amount not exceeding | 10,500 crore. However, the

management would wait for final clarity on the buyback tax rule from

Sebi




Key Metrics

Exhibit 3: Geography-wise split up

Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20

Revenue by geography (%)

Americas 53.8 56.0 56.1 57.1 58.2 58.7

Europe 27.5 26.1 25.7 25.5 24.6 24.6

RoW 18.8 17.9 18.2 17.4 17.2 16.7

Growth QoQ (%)- Constant currency

Americas 1.6 2.9 3.7 3.7 3.1 0.2

Europe 2.7 -3.0 0.9 2.7 -3.0 -0.4

RoW -1.2 1.1 7.9 -2.3 0.3 -4.3


Exhibit 4: Vertical-wise break-up


Revenue by strategic business units (%)

Communications 5.9 5.7 5.8 5.8 5.7 5.9

BFSI 28.7 29.8 30.5 31.4 31.5 31.6

Manufacturing 8.9 8.4 8.3 8.1 8.0 7.9

Technology 14.6 14.5 13.9 13.0 12.6 13.0

Health Business Unit 14.2 13.6 13.0 13.1 13.2 13.2

Consumer Business Unit 15.0 15.3 15.7 15.6 16.2 15.6

Energy,Natural Resources & Utilities 12.7 12.7 12.8 13.0 12.8 12.8


Communications -8.1 -1.3 4.2 2.1 -1.2 2.8

BFSI 3.0 3.0 4.4 5.3 1.3 -0.6

Manufacturing 2.9 -5.4 1.7 0.4 -0.7 -2.0

Technology 0.0 -1.3 1.8 -4.2 -2.0 2.7

Health Business Unit 0.6 -4.7 -3.0 2.8 2.1 -1.5

Consumer Business Unit -1.0 2.6 4.8 1.4 5.3 -4.4

Energy,Natural Resources & Utilities 1.6 1.7 4.0 4.6 -0.7 0.2


Exhibit 5: Service line wise break-up


Revenue by service lines (%)

Cloud Infrastructure Services 27.6 26.3 25.6 25.0 25.2 25.7

Data, Analytics & AI 7.1 7.2 7.8 7.6 7.2 7.4

Digital operations and Platforms 12.4 12.4 12.9 14.7 14.9 14.7

Industrial & Engineering Services 7.4 7.4 7.4 7.1 7.6 7.6

Modern Application Services 45.5 46.7 46.3 45.6 45.1 44.6


Cloud Infrastructure Services 3.4 -4.6 2.6 -0.2 2.3 0.5

Data, Analytics & AI 1.7 1.5 11.1 -0.9 1.3 0.8

Digital operations and Platforms -2.5 -0.6 6.2 16.2 2.3 -2.9

Industrial & Engineering Services 7.4 -1.1 1.9 -2.0 1.7 -0.9

Modern Application Services -0.3 3.3 1.0 1.1 -0.2 -0.9


Weakness in Continental Europe due to European

banks, capital markets and manufacturing slowness

weighs on the geography

Weakness in BFSI mainly due to softness in capital

markets and weakness in European banks. The

management expects this softness to be temporary

and improve as the year progresses

Communication and technology continue to do well

Healthcare and manufacturing to remain soft

Softness in application services mainly due to

decline in consumer business vertical




Exhibit 6: Client & human resource matrix


Client metrics

$1 mn Clients 595 595 584 578 571 564

$10 mn Clients 171 171 177 171 172 166

$50 mn Clients 39 40 39 41 41 41

$75 mn Clients 20 19 19 19 22 23

$100 mn Clients 8 8 9 10 10 13

Headcount, Utilization & Attrition

Closing employee count 159923 160846 171451 172379 171425 174850

Net Utilization (Excluding trainees) 83.4 85.2 85.5 83.2 85.4 85.0

Voluntary Attrition LTM 16.8 17.1 17.5 17.9 17.6 17.6


Three clients added in US$100 million+ category

taking the count to 13




Financial story in charts

Exhibit 7: Digital grows strong at 36.9% YoY in Q1FY20


Exhibit 8: Dollar revenues may grow at 5.8% CAGR in FY19-21E


Exhibit 9: Maintain our margin estimates for FY20E and FY21E


21.7 22.1 22.524.1 25.0

26.728.0

31.433.2

34.8

37.4

9.9

4.62.7

9.4

3.7

9.4

1.1

13.3

7.76.3 5.6

0.0

10.0

20.0

30.0

40.0

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

Q1FY20

%

Digital as a % of revenue Growth, QoQ

7082

7346

7704

8060

1989

2010

2047

2076

8120

2039

8382 9

088

7.0

3.7

4.94.6

0.91.7

0.7 0.8

2.53.2

8.4

0

3

6

9

1000

4000

7000

10000

FY15

FY16

FY17

FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

FY19

Q1FY20

FY20E

FY21E

%

$ m

illion

Dollar revenue Growth, YoY

22.1

20.5

17.9

15.7

17.5

13.0

19.8

18.2 18.0 18.0 18.1 18.3

12

15

18

21

24

FY15

FY16

FY17

FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

FY19

Q1FY20

FY20E

FY21E

%

EBIT margin (IT services)

Digital business continues to ride on upward

trajectory and constituted 37.4% of revenue (vs. 28

in Q1FY19) and grew 37% YoY in the quarter




Exhibit 10: PAT trend


Exhibit 11: One year forward rolling PE


Exhibit 12: Valuation

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE

(| cr) (%) (|) (%) (x) (x) (%) (%)

FY17 55,040 7.4 17.5 (22.7) 15.3 12.2 16.3 16.9

FY18 54,636 (0.7) 12.7 (27.5) 21.1 13.8 16.6 16.9

FY19 58,052 6.3 14.9 18.1 17.9 11.1 15.8 17.8

FY20E 61,672 6.2 16.4 9.9 16.2 10.0 15.9 17.3

FY21E 66,763 8.3 20.0 21.4 13.4 8.0 17.5 18.9


8653 88868490

8008

21211650

2510 2483

9003

2387

9896

12018

1000

4000

7000

10000

13000FY15

FY16

FY17

FY18

Q1FY19

Q2FY19

Q3FY19

Q4FY19

FY19

Q1FY20

FY20E

FY21E

| c

rore

PAT

0

200

400

600

800

1000

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

|

Price 24 20 16 12 8




Exhibit 13: Recommendation History vs. Consensus

0.0

20.0

40.0

60.0

80.0

100.0

0

200

400

600

800

Jul-

19

May-

19

Apr-

19

Feb-

19

Jan-

19

Nov-

18

Oct-

18

Aug-

18

Jul-

18

May-

18

Apr-

18

Feb-

18

Dec-

17

Nov-

17

Sep-

17

Aug-

17

Jun-

17

May-

17

Mar-

17

Jan-

17

Dec-

16

Oct-

16

Sep-

16

Jul-

16

Jun-

16

(%

)

(|)

Price Idirect target Consensus Target Mean % Consensus with HOLD

Source: Bloomberg, Company, ICICI Direct Research

Exhibit 14: Top 10 Shareholders

Rank Name Latest Filing Date % O/S Position (m) Change (m)

1 Premji (Azim Hasham) 31-Mar-19 60.4% 3,630.4 0.0

2 Azim Premji Trust 31-Mar-19 13.3% 797.9 -26.7

3 Life Insurance Corporation of India 31-Mar-19 4.4% 265.2 5.9

4 Stewart Investors 20-Dec-17 1.3% 77.1 -5.3

5 BlackRock Institutional Trust Company, N.A. 30-Jun-19 0.8% 45.6 -0.1

6 The Vanguard Group, Inc. 30-Jun-19 0.6% 33.4 0.0

7 Norges Bank Investment Management (NBIM) 31-Dec-18 0.5% 29.0 2.9

8 ICICI Prudential Asset Management Co. Ltd. 30-Jun-19 0.5% 28.5 -0.5

9 Dimensional Fund Advisors, L.P. 31-May-19 0.4% 22.2 -0.1

10 Azim Premji Philanthropic Initiatives Pvt. Ltd. 31-Mar-19 0.3% 20.8 0.0

Source: Reuters, ICICI Direct Research

Exhibit 15: Recent Activity

Investor name Value Shares Investor name Value Shares

Life Insurance Corporation of India 21.9m 5.9m Azim Premji Trust -98.2m -26.7m

Unigestion 9.5m 2.3m Mirae Asset Global Investments (India) Pvt. Ltd. -8.1m -2.0m

Schroder Investment Management Ltd. (SIM) 6.6m 1.8m IDFC Asset Management Company Private Limited -6.5m -1.6m

Colonial First State Global Asset Management 6.6m 1.5m Marathon Asset Management LLP -5.6m -1.5m

Goldman Sachs Asset Management International 5.4m 1.3m Grantham Mayo Van Otterloo & Co LLC -5.4m -1.4m

Buys Sells

Source: Reuters, ICICI Direct Research

Exhibit 16: Shareholding Pattern

(in %) Sep-18 Dec-18 Mar-19

Promoter 74.31 74.30 73.85

Public 25.21 25.24 25.70

Others 0.48 0.47 0.45

Total 100.00 100.01 100.00





Financial summary

Exhibit 17: Profit and loss statement | crore

FY18 FY19 FY20E FY21E

Total Revenues 54,636 58,052 61,672 66,763

Growth (%) (0.7) 6.3 6.2 8.3

COGS 38,558 41,303 42,976 45,467

Other Expenditure 5,537 6,099 6,033 6,289

EBITDA 10,542 11,938 12,695 15,040

Growth (%) (8.0) 13.2 6.3 18.5

Depreciation 2,112 1,947 2,068 2,239

Other Income 2,400 2,292 2,821 3,369

Exchange difference - - - -

Net interest expense (583) (738) (738) (738)

Pft. from associates 1 (4) (4) (4)

PBT 10,247 11,542 12,706 15,428

Growth (%) (7.1) 12.6 10.1 21.4

Tax 2,239 2,524 2,795 3,394

PAT before Minority int, 8,008 9,017 9,911 12,034

Minority int. 0 14 15 16

PAT 8,008 9,003 9,896 12,018

EPS 12.7 14.9 16.4 20.0

EPS (Growth %) (27.5) 18.1 9.9 21.4


Exhibit 18: Cash flow statement | crore


PAT before minority int. 8,008 9,017 9,911 12,034

Depreciation 2,112 1,947 2,068 2,239

(inc)/dec in Current Assets (717) (150) (1,050) (303)

(inc)/dec in current Liabilities 623 2,867 4,224 1,972

Taxes paid (2,811) (2,515) (2,795) (3,394)

CF from operations 8,423 11,632 13,073 13,314

Other Investments 5,628 4,486 7,307 10,677

(Purchase)/Sale of Fixed Assets (2,070) (2,084) (2,344) (2,537)

CF from investing Activities 3,558 5,013 477 832

Inc / (Dec) in Equity Capital 2 0 - -

Inc / (Dec) in sec.loan Funds (1,098) (3,888) (3,888) (3,888)

Dividend & Divendend tax (854) (1,023) (6,214) (12,359)

CF from Financial Activities (12,998) (4,937) (5,191) (6,146)

Exchange rate differences 38 53 - -

Opening cash balance 5,271 4,493 15,853 24,213

Closing cash 4,493 15,853 24,213 32,213

*calculated, Source: Company, ICICI Direct Research

Exhibit 19: Balance sheet | crore


Liabilities

Equity 905 1,207 1,207 1,207

Reserves & Surplus 47,389 55,605 61,047 67,657

Networth 48,294 56,812 62,254 68,864

Minority Interest 241 264 279 294

Debt - long term 4,527 2,837 2,837 2,837

Debt - short term 9,299 7,110 10,525 11,394

Deffered Tax Liability 306 342 342 342

Other liabilities & provisions 1,346 1,628 1,637 1,637

Source of funds 64,012 68,992 77,874 85,369

Assets

Goodwill 11,758 11,698 11,698 11,698

Intangible Assets 1,811 1,376 1,395 1,416

PPE 6,444 7,060 7,316 7,594

O.non current assets 4,102 4,740 4,740 4,740

Investments 887 815 811 807

Debtors 10,544 10,486 11,141 12,089

Cash & Cash equivalents 4,493 15,853 24,213 32,213

Investments - short term 25,033 22,565 22,565 22,565

O.current assets 10,992 8,724 9,119 8,475

Trade Payable 6,813 8,830 9,537 10,269

OCL & Provisions 5,239 5,495 5,587 5,958

Application of funds 64,012 68,992 77,874 85,369


Exhibit 20: Key ratios | crore


Per share data (|)

EPS 12.7 14.9 16.4 20.0

BV 76.3 94.3 103.4 114.3

DPS 2.0 1.0 5.9 7.2

Operating Ratios

EBIT Margin 15.4 17.2 17.2 19.2

PAT Margin 14.7 15.5 16.0 18.0

Debtor days 70 66 66 66

Creditor days 46 56 56 56

Return Ratios (%)

RoE 16.6 15.8 15.9 17.5

RoCE 16.9 17.8 17.3 18.9

RoIC 24.4 32.7 34.2 41.8

Valuation Ratios (x)

P/E 21.1 17.9 16.2 13.4

EV / EBITDA 13.8 11.1 10.0 8.0

EV / Net Sales 2.7 2.3 2.1 1.8

Market Cap / Sales 2.9 2.8 2.6 2.4

Price to Book Value 3.5 2.8 2.6 2.3

Solvency Ratios

Debt/EBITDA 1.3 0.8 1.1 0.9

Debt / Equity 0.3 0.2 0.2 0.2

Current Ratio 1.8 1.3 1.3 1.3

Quick Ratio 1.8 1.3 1.3 1.3





Exhibit 21: ICICI Direct coverage universe (IT)

CMP M Cap

(|) TP(|) Rating (| Cr) FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E FY18 FY19 FY20E

Cyient (INFENT) 543 620 Hold 6,530 36.0 42.4 46.6 16.1 13.7 12.4 10.3 9.1 7.5 21.4 21.4 20.7 17.3 18.7 18.1

Eclerx (ECLSER) 679 860Reduce 3,532 72.9 60.0 63.1 12.7 15.5 14.7 8.0 9.1 9.2 28.2 21.5 24.8 24.1 16.5 18.9

Firstsource (FIRSOU) 53 60 Buy 3,502 4.8 5.4 5.9 10.7 9.4 8.6 8.8 7.2 6.2 13.0 14.0 15.7 13.9 13.9 13.8

HCL Tech (HCLTEC) 1,021 1,190 Hold 146,833 62.6 74.7 76.7 17.3 14.5 14.1 12.5 10.1 9.1 27.4 26.5 26.0 23.8 24.5 22.5

Infosys (INFTEC) 791 845 Buy 335,118 32.3 35.4 39.4 23.8 21.7 19.5 16.2 14.8 13.0 30.9 32.9 32.8 22.5 23.7 24.3

MindTree (MINCON) 687 930 Hold 15,417 34.3 45.9 37.7 27.4 20.4 24.9 19.8 13.6 14.1 24.9 29.8 24.4 20.8 22.8 17.0

L&T Intotech (LTINFO) 1,614 1,940 Buy 29,148 64.7 87.3 94.6 26.0 19.2 17.7 23.2 14.3 12.3 36.0 40.4 36.4 28.8 31.0 27.8

NIIT Tech (NIITEC) 1,343 1,395 Hold 7,677 45.6 65.7 76.1 27.8 19.0 16.7 13.8 10.4 8.9 19.4 24.2 24.3 15.8 19.9 20.2

Persistent (PSYS) 610 650 Hold 5,119 40.5 44.0 48.7 15.8 14.6 13.2 9.1 7.1 6.4 19.8 20.5 20.5 15.2 15.0 14.9

TCS (TCS) 2,091 2,080 Hold 790,125 67.4 83.8 88.8 31.2 25.0 23.7 23.0 18.9 17.2 37.6 43.8 43.2 29.6 34.4 33.9

Tech M (TECMAH) 684 845 Hold 67,723 42.8 47.7 51.4 17.6 15.8 14.6 13.4 9.5 8.2 21.5 23.6 23.2 20.2 21.2 19.8

Wipro (WIPRO) 267 315 Buy 160,796 12.7 14.9 16.4 21.1 17.9 16.2 13.8 11.1 10.0 16.9 17.8 17.3 16.6 15.8 15.9

EV/EBITDA (x)P/E (x)

Sector / Company

RoE (%)RoCE (%)EPS (|)





RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined

as the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




ANALYST CERTIFICATION

I/We, Devang Bhatt, PGDBM, Deepti Tayal, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the

subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned

Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.

Disclaimer in retail research report:

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and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on

www.icicibank.com

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with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the

securities or derivatives of any companies that the analysts cover.

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as

such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.

Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

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Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in

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ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other

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Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

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ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

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