Wipros 2002-03 results were not a major surprise, its net profit went down 3 per cent over the corresponding previous period, despite the total income having gone up by 22 per cent to Rs 4,404.75 crore (Rs 3,596.33 crore).
Total expenditure was up 30 per cent over the comparable period to Rs 3,518.76 crore (Rs 2,710.96 crore). Wipros net income from operations at Rs 4,286.55 crore (Rs 3,440.51 crore) was up 25 per cent from the year-ago period.
Some 66 per cent of the revenues came from global IT services and products. Revenues from both these segments were up by 25 per cent and 14 per cent respectively over the year-ago period. IT-enabled services, which is still in a nascent stage contributed 4 per cent of the total revenues, while the healthcare and life sciences business had a very strong growth over the corresponding previous period (42 per cent) brought in 2 per cent of the revenues.
At Rs 3,388.13 crore (Rs 2,635.09 crore) Wipros operational costs were up by 29 per cent over the corresponding previous period. Its staff related expenses have gone up by a massive 56 per cent over the corresponding previous period leading to an overall increase of 34 per cent in selling, general and administrative expenses, while the cost of goods sold was up by 27 per cent over the year-ago period.
Lack of momentum in growth rates of revenues and higher cost has had an adverse impact on margins with operating profit managing to rise by just about 12 per cent over the corresponding previous period to Rs 898.42 crore (Rs 805.41 crore). But OPM has shrunk to 21 per cent from the 23 per cent it has been reporting during the past two years.
A 24 per cent decline in other income and a 75 per cent increase in the tax-provisioning saw the company report a net profit (excluding extraordinaries) of Rs 885.99 crore (Rs 885.37 crore).
During the year the company reported an extraordinary expense of Rs 26.27 crore, which, if considered, would see the net profits for the year actually decline by 3 per cent over the corresponding previous period to Rs 859.72 crore (Rs 885.37 crore).
The stock trades at 23 times to its full year EPS of Rs 38.12 at a price of Rs 885. Still expensive.