32 18 199 source deutsche bank key indicators fy1 roe

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ve valuation. The three key factors behind our conviction are (a) a rise in deal wins following the organizational restructuring, (b) an appreciable fall in attrition not only at the overall company level but also at individual projects, and (c) bold inorganic initiatives to consolidate its position with large clients. Valuation Our 12-month target price for Wipro is based on 16x FY14E/12 P/E. We believe this target P/E is appropriate based on forecast earnings CAGR of 17.7% over FY14-16E, and is supported by relative historical/peer multiple trading levels. Risks We identify four industry-level risks: (1) rupee appreciation, (2) a protracted global economic slowdown, (3) aggressive steps by global vendors to adopt the offshore model, leading to competition for clients as well as for employees and (4) increasing wage inflation with supply side (employees) issues. For Wipro, the key risks remain that of beefing up its enterprise IT (especially BFSI) portfolio, executing well on the turnaround of the BPO business, and integrating its various acquisitions. Deutsche Bank AG/Hong Kong Page 27 7 January 2014 Software & Services Indian IT Services Fiscal year end 31-Mar Model updated:06 January 2014 Running the numbers 2011 2012 2013 2014E 2015E 2016E 21.97 21.97 6.00 98.8 22.89 22.89 6.00 117.2 25.33 25.33 6.00 116.5 30.95 30.95 6.00 139.6 37.22 37.22 6.00 168.9 42.87 42.87 6.00 203.9 2,427 1,171,467 1,122,158 2,435 980,131 926,661 2,435 948,513 868,635 2,435 1,359,085 1,260,582 2,435 1,359,085 1,210,559 2,435 1,359,085 1,146,450 P/E (DB) (x) P/E (Reported) (x) P/BV (x) 22.0 22.0 4.84 17.6 17.6 3.75 15.4 15.4 3.75 18.0 18.0 4.00 15.0 15.0 3.30 13.0 13.0 2.74 FCF Yield (%) Dividend Yield (%) 0.8 1.2 1.5 1.5 9.4 1.5 2.8 1.1 5.1 1.1 6.1 1.1 3.6 17.0 19.5 2.5 12.5 14.5 2.3 11.0 12.4 2.9 12.9 14.4 2.4 9.9 11.0 1.9 8.2 9.0 310,986 105,405 65,880 8,211 0 57,669 -1,360 349 0 6,238 62,547 9,714 -135 0 53,317 375,217 121,027 74,111 10,130 0 63,981 -3,491 124 0 8,895 69,385 13,762 -8 0 55,755 376,882 125,436 79,191 9...
View Full Document

This document was uploaded on 02/06/2014.

Ask a homework question - tutors are online