Fundamental Analysis Ofwipro c938

INTRODUCTION TO THE PROJECT:This project comprises of a study on fundamental analysis of WIPRO and contains economic, company and industry analysis.

SCOPE OF THE STUDY: The study basically makes fundamental analysis of WIPRO and contains economic, company and industry analysis in IT sector and tries to identify the intrinsic value of the company by using the published financial details of the company. The study is restricted to one particular company in the sector. The study also includes testing the intrinsic value of the company.

OBJECTIVES OF THE STUDY:

To understand the meaning of fundamental analysis



To understand the strength and weakness of fundamental analysis.



To make a fundamental analysis, economic analysis and industrial analysis of IT sector with specific reference to WIPRO.



To recommend whether to buy, hold or sell the stock based on the analysis of p&l , financial ratios and comparison with peer companies.

RESEARCH METHODOLOGY:This project is prepared by using secondary data obtained from various websites.

LIMITATIONS OF THE STUDY:

The study was confined only to one particular sector and one company.



The study was more confined with secondary data.



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CHAPTER 1: AN INTRODUCTION TO FUNDAMENTAL ANALYSIS What Is Fundamental Analysis? Fundamental analysis is a stock valuation methodology that uses financial and economic analysis to envisage the movement of stock prices. The fundamental data that is analysed could include a company‟s financial reports and non-financial information such as estimates of its growth, demand for products sold by the company, industry comparisons, economy-wide changes, changes in government policies etc.The outcome of fundamental analysis is a value (or a range of values) of the stock of the company called its „intrinsic value‟ (often called „price target‟ in fundamental analysts‟ parlance). To a fundamental investor, the market price of a stock tends to revert towards its intrinsic value. If the intrinsic value of a stock is above the current market price, the investor would purchase the stock because he believes that the stock price would rise and move towards its intrinsic value. If the intrinsic value of a stock is below the market price, the investor would sell the stock because he believes that the stock price is going to fall and come closer to its intrinsic value.To find the intrinsic value of a company, the fundamental analyst initially takes a top-down view of the economic environment; the current and future overall health of the economy as a whole. After the analysis of the macro-economy, the next step is to analyse the industry environment which the firm is operating in. One should analyse all the factors that give the firm a competitive advantage in its sector, such as, management experience, history of performance, growth potential, low cost of production, brand name etc. This step of the analysis entails finding out as much as possible about the industry and the inter-relationships of the companies operating in the industry .The next step is to study the company and its products.

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Strengths and Weakness of Fundamental Analysis Strength  Long-term Trends: Fundamental analysis is good for long-term investments based on long-term trends, very longterm. The ability to identify and predict long-term economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry groups or companies.

 Value Spotting: Sound fundamental analysis will help identify companies that represent good value. Some of the most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and John Neff are seen as the champions of value investing. Fundamental analysis can help uncover companies with valuable assets, a strong balance sheet, stable earnings and staying power.

 Business Acumen: One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such painstaking research and analysis, an investor will be familiar with the key revenue and profit drivers behind a company. Earnings and earnings expectations can be potent drivers of equity prices. Even some technicians will agree to that. A good understanding can help investors avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding the business, fundamental analysis allows investors to develop an understanding of the key value drivers and companies within an industry. Its industry group heavily influences a stock‟s price. By studying these groups, investors can better position themselves to identify opportunities that are high-risk (tech), 3

low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer staples), cyclical (transportation) or income oriented (high yield).

 Knowing Who's Who: Stocks move as a group. By understanding a company's business, investors can better position themselves to categorize stocks within their relevant industry group. Business can change rapidly and with it the revenue mix of a company. This happened to many of the pure internet retailers, which were not really internet companies, but plain retailers. Knowing a company's business and being able to place it in a group can make a huge difference in relative valuations.

Weakness  Time Constraints: Fundamental analysis may offer excellent insights, but it can be extraordinarily time consuming. Time-consuming models often produce valuations that are contradictory to the current price.

 Industry/Company Specific: Valuation techniques vary depending on the industry group and specifics of each company. For this reason, a different technique and model is required for different industries and different companies. This can get quite time consuming and limit the amount of research that can be performed.

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 Subjectivity: Fair value is based on assumptions. Any changes to growth or multiplier assumptions can greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and use sensitivity analysis to present a base-case valuation, a best-case valuation and a worst-case valuation. However, even on a worst case, most models are almost always bullish, the only question is how much so.

 Analyst Bias: The majority of the information that goes into the analysis comes from the company itself. Companies employ investor relations managers specifically to handle the analyst community and release information.

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CHAPTER 2: CASE STUDY OF WIPRO

Overview of Wipro

Wipro Infotech is a leading manufacturer of computer hardware and provider of IT services in India and the Middle East region. Part of Wipro Ltd, the $6.98 billion conglomerate and global leader in technology enabled solutions, the company leverages on the parent's philosophy of 'Applying Thought' to enable business results by being a transformation catalyst. Backed by our strong quality processes and rich experience managing global clients across various business verticals, we align IT strategies to your business goals. From simple changes in process to innovative solutions, we help our customers harness the power of IT to achieve profitable growth, market leadership, customer delight and sustainability. Along with our best of breed technology partners, Wipro Infotech also helps you with your hardware and IT infrastructure needs.

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Company Background

IndustryName: ComputersSoftware

FaceValue: 2.0

HouseName: WiproGroup

ISIN: INE075A01022

Incorporation Date: 29/12/1945

Market Lot: 1

Listing Information of Wipro

Listing Information SECT: Information Technology Face Value2.0 Market Lot Of Equity Shares1 BSE Code507685 BSE GroupA NSE:WIPROEQ

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Various Indian Stock Exchange Where Wipro Is Listed Listed On Bangalore Stock Exchange Ltd. Calcutta Stock Exchange Association Ltd. Cochin Stock Exchange Ltd. Delhi Stock Exchange Assoc. Ltd. Hyderabad Stock Exchange Ltd Inter-connected Stock Exchange of India Madras Stock Exchange Ltd., MCX Stock Exchange National Stock Exchange of India Ltd. Over The Counter Exchange Of India Ltd. The Stock Exchange, Ahmedabad The Stock Exchange, Mumbai

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CHAPTER 3: FUNDAMENTAL ANALYSIS OF WIPRO

A. Economic Analysis Overview of the economy The Indian economy is estimated to have ed a growth rate of 5.0 per cent in 2012-13 in of gross domestic product at factor cost at constant 2004-05 prices, following a growth of 6.2 percent in 2011-12. Growth in 2011-12 and 2012-13 is on the lower side, in the context of the decadal average of 7.9 per cent during 2003-04 to 2012-13. This is attributable mainly to weakening industrial growth in the context of tight monetary policy followed by the Reserve Bank of India (RBI) through most of 2011-12, and continued uncertainty in the global economy. With some moderation in headline WPI inflation, there has been a reduction in the repo rate by the RBI by 50 basis points in April, 2012 and by 25basis points in January 2013. The impact of tight monetary policy has been reflected in the quarterly growth rates of GDP. Quarterly GDP growth declined in each of the successive quarters between the fourth quarter of 2010-11, and the fourth quarter of 2011-12. The slowdown in the economy, particularly in the industry sector has entailed a lower-than budgeted growth in government revenues. However, measures undertaken as part of mid-course correction have helped in improving the expenditure outcome in 2012-13. Measures including the increase in the price of diesel by ` 5 per litre, allowing oil marketing companies (OMCs) to raise diesel prices by small amounts regularly, and a cap on the number of subsidized LPG cylinders are expected to rein in the fiscal deficit. Growth of exports for most of the current year remained in negative territory, and with imports picking up in recent months, the

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trade deficit increased to US$ 147 billion during April-December 2012. The current deficit (CAD) at 4.6 per cent of GDP in the first half of 2012-13 is a cause for concern. The widening of the trade and current deficits has been accompanied by a decline in the value of the Rupee since August 2011. After attaining an all-time low of ` 57.22 per US$ on June 27, 2012 the Rupee rebounded and was in the range of 53-55 per US$ in the month of January 2013. WPI inflation, after remaining persistently high during 2010-11 and 2011-12, has shown signs of moderation since. December 2011. However, it has remained sticky at around 7 to 8 per cent over the last 12 months. With widespread reform measures initiated in recent months and the global economy poised for a moderate recovery in 2013-14, the Indian economy is expected to witness an improved outlook in 2013-14.

GDP Growth As per the Advance Estimates released by the Central Statistics Office (CSO), the Indian economy is estimated to a growth rate of 5.0 per cent in 2012-13 in of GDP at factor cost as against 6.2 per cent in 2011-12 and 9.3 per cent in 2010-11. The growth is on the lower side not only as compared to the recent past but also in the context of growth trends witnessed since 2003-04. The slowdown in the growth of the economy in 2012-13 is mainly on of the slowdown in the industrial sector which is estimated to grow at 3.1 per cent in 2012-13 as against 3.5 per cent in 2011-12 and significantly lower growth of 1.8 per cent in agriculture sector on top of a growth rate of 3.6 per cent achieved in 2011-12. Services sector is estimated to grow at a rate of 6.6 per cent in 2012-13, which is also lower than that achieved in 2011-12. The slowdown in 2011-12 and 2012-13 has been precipitated by domestic factors as well as factors emanating from the rest of the world,particularly advanced 10

economies and India‟s major trading partners. The crisis in the Euro-zone area and slow growth in many other advanced economies have affected growth in India through dynamic linkages. Domestic factors, including the tightening of monetary policy, in order to control inflation and rein in inflationary expectations, resulted in slowing down of investment and growth, particularly in the industrial sector. As per the quarterly data released by CSO, growth in the economy was 5.3 per cent in the second quarter of the current year. This growth has been the lowest since fourth quarter of 2008-09. The growth of agriculture, industry and services sectors is estimated to be 1.2 per cent, 2.8 per cent and 7.2 per cent respectively in the second quarter of 2012-13 as against 3.1 per cent, 3.7 per cent and 8.8 per cent respectively in the corresponding quarter of 2011-12. Cumulative growth in the first two quarters of the current year put together works out to 5.4 per cent as against 7.3 per cent in the corresponding period last year.

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Inflation Overview of Inflation In of expenditure method of estimation,GDP at constant market prices is projected to , a growth of 3.3 per cent in 2012-13 as against a growth of 6.3 per cent in 2011-12. This slowdown in growth could be attributed to three major components the growth of consumption expenditure, gross fixed.

1. Growth since Q4 of 2012-13 is expected to stage a gradual recovery aided by some revival in investment demand and the favourable effect of some moderation in inflation on consumption. Inflation in Q3 of 2012-13 has trended down, though upside risks remain from suppressed inflation which could impart stickiness to inflation trajectory in 2013- 14. Core inflation pressures have receded markedly and are unlikely to re-emerge quickly on demand considerations. However, high food and fuel inflation still remain a concern and this in part is reflected in high I inflation.

2. Since the beginning of 2012, the Reserve Bank has worked towards easing monetary and liquidity conditions in a calibrated manner so as to not jeopardise the trend of moderating inflation. The strategy yielded dividends, as headline and core inflation moderated during Q3 of 2012-13. However, monetary policy needs to continue to be calibrated in addressing growth risks as inflation remains above the Reserve Bank‟s comfort level and macroeconomic risks from twin deficits persists.

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Global Economic Conditions Fiscal Adjustments Likely To Keep Global Recovery Muted In 2013 3. Though the US ed high growth in Q3 of 2012 and the pace of economic contraction moderated in the euro area, growth prospects for advanced economies (AEs) in 2013 remain subdued. While the immediate risk of the fiscal cliff in the US has been averted due to a hurried deal on tax rate hikes, the debt ceiling limit and the sequester issue pertaining to expenditure reduction are still unsettled. Growth in emerging market and developing economies (EMDEs) may have bottomed out, but an enduring recovery hinges on global headwinds.

Global commodity price inflation likely to remain soft, although with some risks from QE 4. Inflation in AEs is likely to remain moderate as demand remains weak, leaving the global inflation scenario benign in the near term. As a baseline case, improved supply prospects in key commodities such as oil and food are also likely to restrain commodity price pressures. However, upside risks persist, especially on the back of some recovery in EMDEs and large quantitative easing (QE) by AE central banks. In the presence of significant excess global liquidity, triggers for supply disruptions or incremental news flow on reduced slack could exacerbate price volatility and become a source of inflationary pressure.

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Unconventional Monetary Policies Reduce Global Financial Stress in The Interim, But Risks Remain Ahead 5. International financial market stress moderated greatly following aggressive monetary easing measures by the central banks of AEs, as also recent policy initiatives on fiscal consolidation in the euro area economies, encouraging capital flows into EMDEs. However, in the absence of credible long-term fiscal consolidation in the US, and generally reduced fiscal space in AEs, the efficacy of monetary policy actions may get subdued. Risks to the global financial sector, although moderating, are likely to persist

.

Indian Economy: Developments and Outlook Output Growth Remains Below Trend, Recovery Likely In 2013-14 6. The Indian economy further decelerated in the first half (H1) of 2012-13, with moderation in all three sectors of the economy. The weak monsoon dented agricultural performance. Policy constraints, supply and infrastructure bottlenecks and lack of sufficient demand continued to keep industrial growth below trend. Subdued growth in other sectors and weak external demand pulled down the growth of services as well. Though a modest recovery may set in from Q4 of 2012-13 as reforms get implemented, sustaining recovery through 2013-14 would require allround efforts in removing impediments to business activity.

Aggregate Demand 14

Improvement in Investment Climate Is a Pre-Requisite for Economic Recovery 7. Demand weakened in H1 of 2012-13. There was significant moderation in consumption as private consumption decelerated even as government expenditure accelerated. On the fiscal side, near-term risks have diminished due to the government‟s repeated avowal of commitment to the revised fiscal deficit target of 5.3 per cent of gross domestic product (GDP) for the year. However, sustainable fiscal consolidation would require bringing current spending, especially on subsidies, under control and protecting, if not enhancing capital expenditure. Going forward, the key to demand revival lies in improving the investment climate as well as investor sentiments through sustained reforms.

External Sector Widening Of CAD and Its Financing Remains a Key Policy Challenge 8. The current deficit (CAD) to GDP ratio reached a historically high level of 5.4 per cent in Q2 of 2012-13. Low growth and uncertainty in AEs as well as EMDEs continued to adversely impact exports in Q3 of 2012-13. This, combined with continuing large imports of oil and gold, resulted in a deterioration of the trade balance. For the time being, strong capital flows have enabled financing of CAD without a significant drawdown of foreign exchange reserves. However, the possibility of volatility in these flows, which may put further pressure on the external sector, cannot be ruled out. A two-pronged approach, of lowering CAD in the medium term while ensuring prudent financing of CAD in the interim, is necessary from the policy perspective. 15

Monetary and Liquidity Conditions With tightening cycle gradually impacting inflation, the Reserve Bank takes measures to combat tight liquidity conditions 9. Monetary policy in India has sought to balance the growth-inflation dynamics that included a frontloaded policy rate cut of 50 basis points (bps) in April 2012 and several liquidity enhancing measures. These included lowering of the cash reserve ratio (CRR) by 50 bps on top of a 125 bps reduction in Q4 of 2011-12 and the statutory liquidity ratio (SLR) by 100 bps in a bid to improve credit flows. The Reserve Bank also infused liquidity of over `1.3 trillion through outright open market operation (OMO) purchases during 2012-13 so far. However, growth in monetary aggregates remains below the indicative trajectory.

Financial Markets Domestic Reform Initiatives and Surging Capital Flows Improve Market Sentiment and Revive the IPO Market 10. Improved global sentiments along with recent policy reforms by the government beginning September 2012, and market expectations of a cut in the policy rate in the face of moderation in inflation, aided FII flows into the domestic market. The equity markets showed significant turnaround, while the rupee remained range-bound. In addition, revival is witnessed in the IPO segment. Although Indian financial market sentiments improved significantly in Q3 of 2012-13, some macroeconomic concerns persist, as witnessed in the inverted yield curve. Sustained

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commitment to curtail twin deficits and nurture growth without fuelling inflation is critical to investor confidence.

Price Situation Headline and Core Inflation Moderated, But Suppressed Inflation Poses Risks 11. Headline inflation moderated in Q3 of 2012-13 with significant moderation in nonfood manufactured products inflation. Both weakening domestic demand and lower global commodity prices contributed to the softening of headline inflation. Though the recent hike in diesel prices will put some pressure on the overall price level, the near-term inflation outlook indicates that the moderation may continue through Q4 of 2012-13. While the pressure from generalized inflation remains muted at the current juncture, risks from suppressed inflation, pressure on food prices and high inflation expectations getting entrenched into the wage-price spiral need to be reckoned with. The inflation path for 2013- 14 could face downward rigidity as some of the risks from suppressed inflation materialize.

Macroeconomic Outlook Balance of Macroeconomic Risks Suggest Continuation of Calibrated Stance 12. Reforms since September 2012 have reduced immediate risks, but there is a long road ahead to bring about a sustainable turnaround for the Indian economy. Business sentiments remain weak despite reform initiatives and consumer confidence is edging down. The Reserve Bank‟s survey of professional forecasters anticipates a slow recovery in 2013-14 with inflation remaining sticky. Fiscal risks have somewhat moderated in 2012-13, but a sustained commitment 17

to fiscal consolidation is needed to generate monetary space. Widening CAD, which is at historically high level, remains a constraint on monetary easing. Against this backdrop, while growth can be ed by monetary policy if inflation risks recede, credible fiscal correction with improved execution in infrastructure space to boost investment would be needed for a sustained revival. The balance of macroeconomic risks suggest continuation of the calibrated stance while increasingly focussing on growth risks

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B. Company analysis

Quarterly Profit & Loss of Wipro JunRs in cr.

Jun-13

Mar-13

Dec-12

Sep-12 12

Net Sales

9733

9613

9588

10620

9248

Other Operating Income

0

0

0

0

0

Total Income

9733

9613

9588

10620

9248

% change

0

0

0

0

0

Total Expenditure

7713

7657

7537

8482

7256

EBITDA

2020

1956

2050

2138

1991

% change (EBITDA)

3

-5

-4

7

9

EBITDA Margin (%)

21

20

21

20

22

Depreciation

250

243

248

280

245

EBIT

1770

1713

1803

1859

1746

Interest

50

40

47

54

129

Other Income

336

461

417

323

356

19

PBT

2057

2135

2173

2128

1973

Tax

425

397

447

508

383

% PBT

21

19

21

24

19

Reported Profit After Tax

1632

1737

1725

1621

1590

Minority Interest

8

9

9

10

10

Net Profit afer Minority Int.

1623

1729

1716

1611

1580

Extra-ordinary Items

0

0

0

0

0

Adjusted Profit

1623

1729

1716

1611

1580

Equity

493

493

493

492

492

Face Value

2

2

2

2

2

EPS (Unit Curr.)

7

6

7

7

6

EPS TTM (Unit Curr.)

26

25

25

25

23

20

Financial Ratios of Wipro

Mar- Mar- Mar- MarPraticulars

Mar- Mar- Mar- MarParticulars

13

12

11

10

13

Valuation

Per

Ratios: (x)

Data:(Rs.)

P/E

12

11

10

share

18.79 20.08 21.26 24.37 EPS(Basic)

24.26 22.75 21.52 31.39

3.46

3.32

3.95

4.56

Cash EPS

28.06 26.71 24.74 36.54

P/BV

5.31

5.55

6.58

8.69

DPS

7.00

EV/Sales

2.90

2.98

3.61

4.12

BookValue

85.85 82.28 69.55 88.00

EV/Total Assets

Dividend EV/EBITDA

6.00

6.00

6.00

Yield

14.16 15.75 17.37 18.83

1.63

1.31

1.31

0.78

(%) Growth:(%)

Solvency Ratios: Interest Coverage

Sales Growth

1.00

20.00 14.00 6.00

23.21 17.61 29.28 42.17 (EBIT / Interest)

EBITDA

Net 9.00

9.00

Growth Net

8.00

debt

22.00

to -0.51

-0.21

-0.05

-0.04

to -0.15

-0.05

-0.01

-0.01

EBITDA Profit 7.00

6.00

15.00 20.00 Net

21

Debt

Growth

equity Current Ratio

Margins:(%)

2.14

2.64

2.44

2.26

Returns:(%)

EBITDA 20.00 19.00 21.00 22.00 Angel ROIC *

66.00 43.00 51.00 64.00

21.00 19.00 20.00 20.00 ROCE

21.00 18.00 20.00 21.00

16.00 15.00 17.00 17.00 ROE

22.00 21.00 23.00 25.00

Margin PBT Margin Net

Profit

Margin

22

Quarterly Ratios: Growth

rate Jun-

yoy:(%)

Mar-

Dec-

Sep-

Growth

13

13

12

12

qoq:(%)

1.46

7.18

3.32

22.90

YOY EBITDA

QoQ

Growth YOY

Mar-

Dec-

Sep-

13

13

12

12

3.00

-5.00

-4.00

7.00

1.00

0.00

EBITDA

Growth Sales

QoQ 5.00

13.00 -4.00

Sales

17.00

Growth

-

Growth

YOY Net Profit

15.00 10.00

QoQ Net Profit 3.00

Growth

rate Jun-

17.00 18.00 24.00

-6.00 Growth

23

1.00

7.00

2.00

C. Industry Analysis

Analysis of Indian IT Companies

Peer Comparison:-

P/E

P/BV

Market Cap Company

EV/EBIDTA

ROE

ROCE

D/E

(x)

(%)

(%)

(x)

(TTM) (TTM) (Rs. in Cr.) (x)

(x)

TCS

382,211.80

28.84

11.77

18.37

44.6

53.7

0.00

Infosys

172,016.46

19.88

4.77

10.93

27.7

37.5

0.00

Wipro

117,156.70

19.83

4.84

12.83

23.3

25.0

0.23

74,047.05

20.51

7.24

11.74

31.3

32.3

0.17

HCL Technologis

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 TCS:

TCS is the bell weather in IT sector and has maintained to be the large cap stock among all the IT stocks on the Indian Bourses. Recently TCS has earned the Xclent customer base award 2012 for its TCS BaNCS banking software.

It sees better IT spends, ramp-up in its clients in the US as compared to earlier and the fact that TCS has 8% wage hike is showing that the company is expecting more revenue growth compared to its peers.

This is the company that was affected by the recession during 2008-09 because of its diversified network, at that point of time it decreased its cost by firing 300000 employees and maintained 46.7 EPS higher compared to other years.

Looking at TCS financials:

TCS is allocating 15% of its income to its contingent liability which shows the ability of the company to maintain its growth even in its aggressive acquisitions.

It has maintained good reserves and decreasing debt which will be the safest parameters for the investor to look at to invest.

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Looking at TCS ratios:

Debt to Equity ratio is 0.01 this means TCS has one paisa of debt to equity which shows it has low debt and the PAT is 415 times higher than the interest paid by the company.

It is a low beta stock which means it will not be affected by the market forces, rather its performance is the key, it has shown a consistent EPS growth rate of 6% and the PE growth rate of 10%, using this parameter it is projected that the share price may stand at Rs.1372 in a year if the company maintains to continue its exports which inversely gain revenues from the dollar appreciation.

The return on net worth is 37% which is the highest in the sector.

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INFOSYS: India‟s second-largest software services exporter by Revenue‟s and which is another Bellwether IT stock, has been weak in keeping its financials than other IT companies and also Analysts estimates., In spite of the initiative of leading a government effort to give every Indian citizen an ID number, a crucial initiative in a country where most people have no driver‟s license, port or even birth certificate.

Apart from this the other factor that drove Infosys share price by 10% decrease in share price over the last year was due to Visa fraud charges leveled in the United States. It has continued to maintain the name of “company with politics” and bad reputation in the eyes of employees with regards to the salary hikes and work pressure.

The company has been good to give employee appraisal rather than rewards, on the other side of the coin it has the ability to make any employee proficient to work in another company.

Looking at INFOSYS Financials:

There is a perception among the ants and the investors that in the presentation of the financial statement by Infosys is the best with its Zero Debt, increased revenues and reserves.

Infosys has an average income growth rate of 19% and it has allocated 4% of its income to its contingent liability which is higher than past year and has been increasing YOY.

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Among all the other giants in the IT sector Infosys has the highest FII holding of 37.36% (as on 1 May 2012), If the company gives high growth rate in the next quarter it can become a good stock after HCL Technologies.

Looking at INFOSYS ratios:

Infosys is a low beta stock. Infosys has 10% average EPS growth rate and 6% P/E over the years.

If the company continues to maintain the same momentum in generating more revenues and along with the continuity in its reserves and income, it is projected that the share price could be at Rs.3772 in a year with its current average growth rate.

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Wipro:

The company that started with the innovation and integrity in the consumer product business is now the 3rd largest IT services company in India and entered into the Forbes top 500 companies list.

Wipro‟s IT services and Hardware ed for 75% of its total revenues till the year 2011 and its results has come in line with the expert expectations.

After tasting sweet success with its Glucose Powder Brand Glucovita, Wipro Consumer Care & Lighting (WCCL) now plans to launch the product in the tablet form as well, where an individual can have two tablets and get instant energy.

WCCL‟s first major overseas acquisition was the Singapore-based Unza Holdings for around Rs 1,000 crore in 2007, through which it operates in 40 countries.

Looking at Wipro’s financials:

The consolidated result takes into all the segments, in which the Consumer Care and Lighting ed for more than the IT services during the year ended 2012.

Wipro has 1% of its income as its contingent liability which is a good parameter for investment, it has good reserves, it has negative cash flows, and company is going to invest 100 crores this fiscal to increase the capacity in various categories, be it lighting, soaps or personal care, to meet demand.

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Looking at Wipro’sRatios

Wipro is a low beta stock. Wipro has 22 Paisa debt for every rupee of its equity.

The average growth of EPS is 4% and P/E is 5% the estimated price stood at Rs.527, company has PAT 82 times to its interest cost.

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HCL Technologies: It occupied 4th place in the top IT companies in INDIA and it is after the Giant TCS in generating revenues, HCL consistently has been increasing its quarterly performance, through better revenue visibility and winning the market share.

The share price has gained around 25% over the past and they won D 2.5 billion of deals over the last couple of quarters, it is expected that in the next two quarters HCL is going to outperform in the industry over the others.

According to the Technical Analysis the resistance is at 519-521 now it is trading at 512(as on 30 April 2012) which can shoot up in the future.

It is the hot stock in the IT sector of INDIA. It granted employee stock options of around 206.70crores which is the different treatment of employees in the entire sector.

Looking at HCL Technologies financials:

It is maintaining 4% of its income as contingent liability which is the average of the industry, it has shown good income, reserves and the company have high debt when compared to the other companies so, compare with the return on the investment it has Rs.10 return on every one rupee it spends.

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Looking at HCL Technologies ratios:

Return on net worth is 22% which shows that the company has good managerial abilities.

It has 22 paise of debt for every rupee it spends.

It maintained average EPS growth rate of 15% and P/E of 26% which is highest in the sector, using these parameters it can be said that the price of the share will stand at Rs.687 in the future, keeping a look on its financials and ratios it is for a short term investment until and unless it decreases it debt.

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CONCLUSION:

Analysis of the economy

The IT sector earns income in dollars as they are mainly the exporters. In past 4 months rupee depreciated against dollar. So the entire it sector specially WIPRO has made good amount of profit in last quarter.

Analysis of the company

Looking at the P&L : According to the current scenario for past six months, WIPRO has made net profit of rupee 1623 had depreciated in of dollar. It can be seen that year on year the sales and revenue (total income) has also increased. It can be seen that in June 2012 the sales and total income were rupees 9248 and by June 2013 it increased to rupees 9733. The EBIT of company in June 2012 was rupees 1746 whereas by June 2013 it increased to rupees 1770.the reported profit after tax in June 2012 was rupees 1590 and in June 2013 was rupees 1632.all this indicates that the company has good sales and valuation .the company‟s future seems to be attractive. All this gives is an indication that we should buy WIPRO for long term.

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Looking at financial ratios P/E ratio of the company is less compared to the peer. So the returns seem to be good and we should invest in WIPRO. All the above ratios shows the company‟s overall performance was good in 2010.in 2012 the performance deteriorated but it again improved in 2012.

Analysis of the industry

Among the top four companies of the IT sector in India, TCS is the good going stock and it has ability to double its share price in the near future by its outstanding numbers.

It is a stock for long term holding, next is the HCL technologies which is in the race to occupy the top rank in the sector though it is a short term investment stock and can generate more revenues in the near future with its deals and it continued in paying dividends.

Wipro is expected to grow in the near future by its investment activities and it is better to don‟t step onto Wipro and Infosys till they show big numbers like TCS.

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BIBLIOGRAPHY 

www.stockmarketinstitute.org

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http://stockmarketinstitute.org/blog/?tag=wipro-fundamental-analyis

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http://www.rbi.org.in/scripts/PublicationsView.aspx?id=14923#top

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http://www.slideshare.net/sivapriya28/wipro-technologies-ltd?from_search=4

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http://indiabudget.nic.in/ub2013-14/frbm/frbm1.pdf

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http://www.angelbroking.com/

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