IT · investment research
Wipro
WIPRO
Verdict
AVOID
medium confidence · 3-5 years
Composite score
41/100
Weighted across all eight pillars
Business quality
44/100
Moat, returns, balance sheet, cash, management
Valuation score
29/100
At 43.8x against a sector median of 43.8x, the price embeds roughly 29% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
Avoid for now — the business or governance risk outweighs the opportunity.
WHY
- • Management & governance scores 16/100 (improving) — Whether management historically delivered what it promised.
- • Growth quality scores 20/100 (deteriorating) — Top-line compounding over the reported history.
- • Valuation scores 29/100 (stable) — At 43.8x against a sector median of 43.8x, the price embeds roughly 29% earnings growth. Anything less has to come out of the multiple.
- • Business & moat scores 67/100 (deteriorating) — Scale and integrated operations keep unit costs below most listed peers.
WHERE
IT · Mid cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 10% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹575 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Promoter pledge — 24.3% of promoter holding is pledged.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check US/EU tech spend — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Wipro is a moat-protected it business compounding revenue at 6.6% and profit at -1.5%, earning 14.3% on capital. Quality scores 44/100 and valuation 29/100 at 43.8x. The decision is therefore avoid with medium confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Wipro operates in the Indian it sector with a mid-cap footprint and a listed market value of about ₹150k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Interest cost on borrowings
- • Distribution and marketing spend
Moat · 61/100
Cost leadership
Scale and integrated operations keep unit costs below most listed peers.
Segment mix
Growth 10.9% · margin 7.2% — Growing broadly in line with the overall business.
Growth 17.1% · margin 19.7% — Growing broadly in line with the overall business.
Growth 13.7% · margin 12.8% — Growing broadly in line with the overall business.
Growth 12.1% · margin 33% — Growing broadly in line with the overall business.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
67/100Trend: deteriorating · weight 14%
- MoatCost leadership
Scale and integrated operations keep unit costs below most listed peers.
- Segment concentrationDigital & cloud services is 24.7% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin26.0%
Margin moved from 32.0% to 26.0% year on year.
Profitability & returns
41/100Trend: stable · weight 16%
- ROCE14.3%
ROCE was 14.5% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE16.3%
Return on equity after leverage — read alongside debt levels.
- Net margin11.4%
Share of every rupee of revenue that reaches reported profit.
Growth quality
20/100Trend: deteriorating · weight 15%
- Revenue CAGR (4y)6.6%
Top-line compounding over the reported history.
- Profit CAGR (4y)-1.5%
Profit lags revenue, so growth is being bought with margin.
- Growth sourceCapex-led (organic)
Capex is 10.0% of revenue this year.
Balance sheet
46/100Trend: improving · weight 12%
- Debt / EBITDA1.97x
Leverage is serviceable from current cash generation.
- Debt / equity0.82x
Capital structure relative to shareholder funds.
- Working capital62 days
Cycle is tight, so growth is largely self-funding.
Cash conversion
51/100Trend: stable · weight 13%
- OCF / PAT85%
Reported profit is backed by operating cash.
- Free cash flow₹-179 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
16/100Trend: improving · weight 14%
- Guidance delivery38% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding13.6% (+0.69 y/y)
Promoter ownership is stable or rising.
- Pledge24.3% pledged
Pledged promoter shares add forced-selling risk in a drawdown.
- Institutional flowFII +2.83 · DII -1.86
Direction of institutional ownership over the last year.
- Capital allocationSurplus cash is largely returned to shareholders…
Surplus cash is largely returned to shareholders rather than reinvested.
Industry & macro
61/100Trend: stable · weight 8%
- Demand trendstable
IT (India) demand is stable.
- StructureFragmented
Fragmented — share shifts are possible but price competition is real.
- Competitive intensitylow
How hard it is to keep pricing and share.
- Macro driversUS/EU tech spend, USD/INR, Wage inflation
Variables that move the earnings base regardless of company execution.
Valuation
29/100Trend: stable · weight 8%
- P/E vs sector43.8x vs 43.8x
At 43.8x against a sector median of 43.8x, the price embeds roughly 29% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted43.80 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield-0.12%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹50,167 Cr | ₹14,548 Cr | ₹7,856 Cr | ₹6,049 Cr | ₹29 Cr | 17% |
| FY2023 | ₹53,817 Cr | ₹6,996 Cr | ₹3,288 Cr | ₹2,598 Cr | ₹445 Cr | 16.7% |
| FY2024 | ₹57,467 Cr | ₹17,815 Cr | ₹7,304 Cr | ₹5,916 Cr | ₹744 Cr | 18.3% |
| FY2025 | ₹61,116 Cr | ₹19,557 Cr | ₹9,387 Cr | ₹7,791 Cr | ₹4,735 Cr | 14.5% |
| FY2026 | ₹64,766 Cr | ₹16,839 Cr | ₹7,409 Cr | ₹6,298 Cr | ₹-179 Cr | 14.3% |
No accounting-quality flags in the sample data.
Ownership & management
Who owns it, and have they delivered?
Promoter
13.6%
+0.69 y/y
Pledge
24.3%
Forced-selling risk
FII
12.6%
+2.83 y/y
DII
6%
-1.86 y/y
Guidance delivered in 38% of the last eight quarters; average leadership tenure 13 years.
Surplus cash is largely returned to shareholders rather than reinvested.
- ⚠ Guidance met less than half the time over the last eight quarters
Industry & macro context
IT (India)
Demand trend
stable
Cyclicality
high
Competition
low
Regulatory pressure
low
Fragmented — share shifts are possible but price competition is real.
Macro drivers: US/EU tech spend · USD/INR · Wage inflation
Valuation
fair versus the sector
P/E
43.8x
Sector median P/E
43.8x
P/B
6.78x
Earnings yield
2.28%
FCF yield
-0.12%
PE / growth
43.8
Estimated fair-value band ₹575 – ₹735 , built on FY2026 EPS of ₹14.2. Gap to the current price: +127.4%. Ranges are a modelling output, not a target price.
At 43.8x against a sector median of 43.8x, the price embeds roughly 29% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Promoter pledgehigh
24.3% of promoter holding is pledged.
Monitor: Pledge disclosures with each shareholding filing.
- Cyclicalitymedium
IT (India) earnings swing with the cycle, so trailing numbers flatter the peak.
Monitor: US/EU tech spend
- Governancehigh
Guidance met less than half the time over the last eight quarters
Monitor: Annual report disclosures and auditor commentary.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 14.3% | stays above 11% | falls for two consecutive years |
| Cash conversion | 85% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 6.6% CAGR | tracks the 29% priced in | slows for two quarters with no margin offset |
| Promoter holding | 13.6% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 72/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.