WIPRO 2020-21 Annual Report Analysis

Wed, 31 Mar

WIPRO has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

WIPRO Income Statement Analysis

• Operating income during the year rose 1.3% on a year-on-year (YoY) basis.
• The company's operating profit increased by 18.6% YoY during the fiscal. Operating profit margins witnessed a fall and down at 23.6% in FY21 as against 20.2% in FY20.
• Depreciation charges increased by 32.5% and finance costs decreased by 30.6% YoY, respectively.
• Other income declined by 7.2% YoY.
• Net profit for the year grew by 11.1% YoY.
• Net profit margins during the year grew from 16.0% in FY20 to 17.5% in FY21.

WIPRO Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	611,376	619,430	1.3%
Other income	Rs m	27,250	25,295	-7.2%
Total Revenues	Rs m	638,626	644,725	1.0%
Gross profit	Rs m	123,423	146,326	18.6%
Depreciation	Rs m	20,855	27,634	32.5%
Interest	Rs m	7,328	5,088	-30.6%
Profit before tax	Rs m	122,490	138,899	13.4%
Tax	Rs m	24,801	30,349	22.4%
Profit after tax	Rs m	97,689	108,550	11.1%
Gross profit margin	%	20.2	23.6
Effective tax rate	%	20.2	21.8
Net profit margin	%	16.0	17.5

Don't Miss: Key Information for Long-term Investors

WIPRO Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 230 billion as compared to Rs 216 billion in FY20, thereby witnessing an increase of 6.3%.
• Long-term debt stood at Rs 7 billion as compared to Rs 5 billion during FY20, a growth of 54.1%.
• Current assets rose 1% and stood at Rs 523 billion, while fixed assets rose 5% and stood at Rs 302 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 826 billion as against Rs 807 billion during FY20, thereby witnessing a growth of 2%.

WIPRO Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	551,667	545,939	-1.0
Current Liabilities	Rs m	216,393	230,040	6.3
Long-term Debt	Rs m	4,840	7,458	54.1
Total Liabilities	Rs m	806,784	825,658	2.3
Current assets	Rs m	519,851	523,186	0.6
Fixed Assets	Rs m	286,933	302,472	5.4
Total Assets	Rs m	806,784	825,658	2.3

WIPRO Cash Flow Statement Analysis

• WIPRO's cash flow from operating activities (CFO) during FY21 stood at Rs 148 billion, an improvement of 46.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs 8 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -129 billion, an improvement of 15% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 26 billion from the Rs -14 billion net cash flows seen during FY20.

WIPRO Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	100,643	147,550	46.6%
Cash Flow from Investing Activities	Rs m	34,012	7,739	-77.2%
Cash Flow from Financing Activities	Rs m	-150,998	-128,840	-
Net Cash Flow	Rs m	-14,421	25,559	-

Current Valuations for WIPRO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 19.8, an improvement from the EPS of Rs 17.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 414.2, stands at 20.9 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.2 times, while the price to sales ratio stands at 3.7 times.
• The company's price to cash flow (P/CF) ratio stood at 12.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	107.0	113.1
TTM Earnings per share	Rs	17.1	19.8
Diluted earnings per share	Rs	17.8	19.8
Price to Cash Flow	x	9.1	12.9
TTM P/E ratio	x	11.0	20.9
Price / Book Value ratio	x	2.4	3.2
Market Cap	Rs m	1,316,929	1,756,612
Dividends per share (Unadj.)	Rs	1.0	1.0

Ratio Analysis for WIPRO

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 2.3x during FY21, from 2.4x during FY20. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 28.3x during FY21, from 17.7x during FY20. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 19.9% during FY21, from 17.7% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 26.0% during FY21, from 23.3% during FY20. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 13.8% during FY21, from 13.0% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	2.4	2.3
Debtors’ Days	Days	62	56
Interest coverage	x	17.7	28.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	13.0	13.8
Return on equity	%	17.7	19.9
Return on capital employed	%	23.3	26.0

To see how WIPRO has performed over the last 5 years, please visit here.

WIPRO Share Price Performance

Over the last one year, WIPRO share price has moved up from Rs 196.6 to Rs 414.2, registering a gain of Rs 217.6 or around 110.7%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,543.2 (down 0.7%). Over the last one year it has moved up from 12,842.7 to 26,543.2, a gain of 13,701 points (up 106.7%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

(To know more, check out historical annual results for WIPRO and quarterly results for WIPRO)

Read: Latest Annual Report Analysis of WIPRO