Wipro Limited — FY2021 Form 20-F
Reporting period: Fiscal year ended March 31, 2021. Although the request metadata says “2020 Q4,” this is an annual report, not a quarterly filing. Wipro is a global IT services, consulting and business process services company. Financial statements are prepared under IFRS and presented in Indian rupees; U.S. dollar figures are convenience translations.
Financial performance and position
Amounts below are in ₹ millions unless stated otherwise. The filing’s reported revenue in the consolidated income statement differs from segment revenue, which includes foreign-exchange effects for segment reporting.
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue, income statement | 619,430 | 610,232 | 1.5% |
| Segment revenue | 622,425 | 613,401 | 1.5% |
| Operating income | 123,053 | 105,730 | 16.4% |
| Profit before tax | 139,007 | 122,512 | 13.5% |
| Profit for the year | 108,662 | 97,713 | 11.2% |
| Profit attributable to equity holders | 107,946 | 97,218 | 11.0% |
| Basic EPS | ₹19.11 | ₹16.67 | — |
- Margins: Management reports gross margin of 32.01%, up 316 basis points, and operating margin of 19.77%, up 257 basis points. These reported margin calculations include other operating income with revenue.
- Cash flow: Operating cash flow was ₹147,550, up from ₹100,643, mainly due to lower working-capital requirements. Investing activities generated ₹7,739; financing activities used ₹128,840. Cash and cash equivalents increased to ₹169,793 at year-end.
- Liquidity: Cash and short-term investments totaled ₹345,500; the company-reported net cash position, after borrowings and bank overdrafts, was ₹262,168. Working capital was ₹293,146.
- Debt: Loans, borrowings and overdrafts totaled ₹83,332, excluding lease liabilities of ₹21,182. Total equity was ₹554,593 and total assets were ₹831,434.
Material changes versus FY2020
- IT Services revenue grew 2.0% to ₹605,815, while segment results rose 14.1% to ₹122,850. Europe and APMEA led revenue growth; Americas 2 declined slightly, primarily due to lower banking, financial services and manufacturing revenue.
- IT Products revenue fell 34.1% to ₹7,685, reflecting Wipro’s more selective approach to standalone product and systems-integration work. The segment moved from a ₹323 loss to ₹45 profit.
- ISRE revenue grew 12.1% to ₹8,912, and the segment moved from a ₹1,849 loss to ₹1,061 profit, primarily on improved project execution and lower subcontracting costs.
- Cost of revenue declined 3.0%, aided by lower travel and subcontracting costs. General and administrative expenses increased 16.3%, including higher employee, communications, insurance and COVID-related costs.
- Effective tax rate rose to 21.83% from 20.24%, primarily due to reduced Indian special economic zone tax benefits. Finance expense fell to ₹5,088; finance and other income declined to ₹20,912, mainly due to lower interest income.
Outlook, commentary and risks
- The filing provides no specific quantified revenue or earnings guidance. Management describes demand for digital transformation as strong but says the economic and COVID-19 recovery outlook remains uncertain.
- Management cautions that margin improvement may be difficult. Wage inflation, hiring and training costs, acquisition mix, customer price resistance, utilization, insourcing/vendor consolidation and currency movements could weigh on profitability.
- COVID-19 continued to affect client demand, delivery, collections and operating costs. Fewer than 3% of employees were working from Wipro offices at the time described; remote work also increases cybersecurity exposure.
- Revenue concentration is moderate at the largest IT Services client (3.1% of segment revenue), but the ten largest represented 19.5%. The business is geographically exposed: the Americas and Europe together generated most IT Services revenue.
- Foreign-exchange exposure is material because much revenue is in foreign currencies while many costs are in rupees. A 100-basis-point rise in interest rates would increase annual net interest expense on floating-rate borrowings by about ₹829.
- Disputed Indian income-tax claims were ₹80,032 at March 31, 2021 and were not acknowledged as debt; management expects its position to prevail, but outcomes are uncertain. Other disputed excise, customs, sales-tax and related demands totaled ₹11,413. The filing says resolution of ordinary-course proceedings is not expected to materially harm financial position or results.
- Wipro completed the ₹116,644 share buyback, including tax and costs, and paid an interim dividend of ₹1 per share; the board recommended that amount as the final dividend. Capco was acquired after year-end in April 2021 for ₹108,760 upfront cash consideration, funded with borrowings and cash. The Ampion acquisition was announced, subject to closing conditions.
- Auditors issued unqualified opinions on the IFRS financial statements and internal control over financial reporting. The auditor highlighted fixed-price contract revenue estimates and expected credit-loss allowances as critical audit matters.
Key facts for investors to verify
- Reconcile income-statement revenue of ₹619,430 with segment revenue of ₹622,425 and the foreign-exchange reporting treatment.
- Assess how much of the margin and cash-flow improvement is sustainable versus attributable to pandemic-related travel savings and lower working-capital needs.
- Track Capco’s integration, funding and contribution to revenue and margins, as well as the announced Ampion transaction.
- Monitor the ₹80,032 disputed tax claims, other contingencies, and changes in SEZ-related tax benefits.
- Review foreign-exchange sensitivity, client and regional concentration, and continuing COVID-19, wage-inflation and cybersecurity risks.