2. Who are WIPRO LTD?
- WIPRO is a technology giant, headquartered in Bangalore, which specialises in essential data
services like cloud computing, cyber security, data processing, artificial intelligence and machine
learning, among others. The firm started in 1945 as a vegetable vending company, but soon
experimented with a variety of products, before settling in its modern avatar of being one of the
biggest IT and consulting firms globally.
- With over 250,000 employes, clients stretched across 66 countries and operating revenues upwards
of USD 8.4 billion, they have established themselves as one of India and the world’s most trusted IT
services organisation.
3. What major events took place in and around
between 2020-21 & 2021-22?
- In the AY 2020-21, WIPRO, much like other firms dealt with the COVID-19 pandemic and the closure of
physical offices. That said, with firms forced to increase their online presence as a result of the lockdowns,
WIPRO found itself in high demand during the COVID years.
- In July 2020, they appointed their new CEO, Thierry Delaporte and his arrival triggered an almost 70% share
price rise till the end of the year 2020.
- In the AY 2020-21, WIPRO bought back INR 9,500 Cr worth of shares upon signing a USD 700 million
contract with German Wholesaler METRO AG for 5 years. In the same period, their stock prices grew by
around 70%
4. What major events took place in and around
between 2020-21 & 2021-22?
WIPRO engaged in two major strategic acquisitions in the aforementioned time period that may have a
sizeable impact on their long-term business. These are:
- London-based tech consultancy service provider CAPCO, which has a strong foothold in East-Asian
Markets for USD 1.45 Billion. CAPCO currently claims to service over 5000 businesses in over 30
countries.
- Connecticut based consultancy service Rizen Holdings from global tech giant SAP, for USD 540
million. This was done with the intention to ‘ boost leadership in oil & gas, utilities, manufacturing
and consumer industries’
8. Major changes to WIPRO’s
financial statements in the
assessment period
9. Major changes to WIPRO’s financial statements in the
assessment period
- Capital Employed: 20% increase from FY 2020-21 to 2021-22.
- Reserves and Surplus: 20% increase from FY 2020-21 to 2021-22
- Long term liabilities: 60% decrease from FY 2020-21 to 2021-22
10. Major changes to WIPRO’s financial statements in the
assessment period
- Non-Current Investments: 101% increase from FY 2020-21 to 2021-22.
- Operating revenue: grew by 18.44% between March 21 and March 22
- Operating Profit: grew by 2.65% between March 21 and March 22.
11. Major changes to WIPRO’s financial statements in the
assessment period
- Non-Current Investments: 101% increase from FY 2020-21 to 2021-22.
- Operating revenue: grew by 18.44% between March 21 and March 22
- Operating Profit: grew by 2.65% between March 21 and March 22.
12. Major changes to WIPRO’s financial statements in the
assessment period
- Profit after Tax grew by 20.6% between March 21 and March 22, whereas
Profit before Tax grew by 20.3%.
- WIPRO's investments grew by 114.05% between March 20 and March 22.
Meanwhile, their long term borrowings also grew by 22%.
15. Current Ratio
Current Assets : Current
Liabilities
Current Assets: Current Liabilities
51,772.20 : 23,173.70
= 2.234: 1
- Wipro has a very strong current ratio,
with the ideal for companies being
between 1.5:1 and 2:1.
- This might be a sign of potential
undertrading, as WIPRO can possibly
use some of its spare current assets
into expanding the business.
16. Quick Ratio
Current Assets - Stock : Current
Liabilities
Current Assets - Inventory: Current Liabilities
51,684.70 : 23,173.70
= 2.303: 1
- Wipro has a very strong current ratio,
with the ideal for companies being 1:1.
- This is because in its tech-driven
services industry, WIPRO does not need
a lot of inventory for its operations, as
its products are largely digital.
17. Debt / Equity
Ratio
Total Debt : Total Equity
Total Liabilities: Total Equity
64.5: 54,350.7
= 0.0011: 1
- Wipro has a very strong debt/equity
ratio, with the ideal for companies being
1:1.
- This shows that WIPRO is a low risk
business, with a limited proportion of its
expansion funded by borrowings,
making its growth sustainable.
18. Proprietary
Ratio
Shareholders’ Fund / Fixed
Assets * 100
Equity + Reserves: Total Assets
54,350.7: 80,382.80
= 0.67: 1
- This shows that WIPRO is a low risk
business, with a great proportion of
its expansion funded by its
shareholders, making its growth
sustainable, but unfortunately for its
key shareholders, diluted.
20. Return on assets
Ratio
Profit Post Interest and Tax /
Total Assets * 100
Profit Post Interest and Tax / Total
Assets * 100
(12,135.3 / 80,382.80) *100
= 15.09 %
- An ROA of over 5% is usually
considered to be very strong,
which puts WIPRO in a strong
ideal position, generating decent
profits for its shareholders from
its existing assets.
21. Asset Turnover
Ratio
Net Sales / Average Total
Assets
*100
Net Sales / Average Total Assets *
100
(59,574.4 / 80,328.8) *100
= 74.11 %
- This metric helps investors
understand how effectively
companies use their assets to
generate revenues.
22. Net Profit
Ratio
Net Profit / Net Sales * 100
Net Profit / Net Sales * 100
(12,135.3 / 59,574.4) *100
= 20.37 %
- A higher net profit ratio
showcases that a firm is able
to generate higher net profits
by exercising strong cost
control and effectively pricing
its services
