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Wipro Ltd ADR WIT

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Morningstar’s Analysis

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Wipro’s Q4 Results Boosted by Gradual Recovery in IT Services; Increasing FVE to INR 270

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

Wipro’s fourth-quarter results came in toward the high end of management’s guidance--as demand for digital transformation projects has picked up from weakness brought on by the global pandemic. The quarter was the first one in which Wipro worked under its new operating model that has reduced the number of organizational layers within the company. Still, margin expansion appeared to come largely from offshore mix and employee utilization being at their highest levels ever due to pandemic-related tailwinds--some of which we think will be temporary. We’ve increased our expectations for fiscal 2022 as we expect acquisitions of consultancy and services firms Capco and Ampion should serve as a helpful complement to organic growth--especially within the banking, financial services, and insurance verticals. As a result, we are increasing our fair value estimate for Wipro to INR 270 ($3.50 for the U.S. ADR) from INR 260 ($3.60 for the U.S. ADR) per share. With shares trading near INR 430 ($6.40 for the U.S. ADR) upon results, we view Wipro as significantly overvalued and suggest investors hold back from investing in the narrow moat name.

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Company Profile

Business Description

Wipro is a leading global IT services provider, with 175,000 employees. Based in Bengaluru, the Indian IT services firm leverages its offshore outsourcing model to derive over half of its revenue (57%) from North America. The company offers traditional IT services offerings: consulting, managed services, and cloud infrastructure services as well as business process outsourcing as a service.

Sarjapur Road, Doddakannelli
Bangalore, 560035, India
T +91 8028440011
Sector Technology
Industry Information Technology Services
Most Recent Earnings Dec 31, 2020
Fiscal Year End Mar 31, 2021
Stock Type
Employees 180,000