Wipro Limited — FY2020 Form 20-F Summary
Reporting period: Annual report for the fiscal year ended March 31, 2020, prepared under IFRS. Although the request identifies 2019 Q4, this filing covers FY2020, not a standalone quarterly period. Figures are in Indian rupees (₹) millions unless stated otherwise; U.S. dollar figures are convenience translations.
Business context and financial performance
Wipro is a global IT services, consulting and business process services company. IT Services generated 96.8% of FY2020 segment revenue; IT Products and India State Run Enterprise (ISRE) accounted for 1.8% and 1.4%, respectively.
| Metric | FY2020 | Prior year / change |
|---|---|---|
| Reported revenue | ₹610,232 (US$8.094 billion) | ₹585,845; +4.13% |
| Gross profit | ₹174,147 | ₹172,812; +0.73% |
| Operating income | ₹105,730 | ₹99,910; +5.83% |
| Profit before tax | ₹122,512 | ₹115,415 |
| Profit attributable to equity holders | ₹97,218 | ₹90,031; +7.98% |
| Basic / diluted EPS | ₹16.67 / ₹16.62 | ₹14.99 / ₹14.95 |
| Operating cash flow | ₹100,643 | ₹116,316 |
| Cash and cash equivalents | ₹144,499 | ₹158,529 |
| Investments | ₹198,937 | ₹227,632 |
| Total debt, excluding lease liabilities | ₹78,042 | ₹99,467 |
| Working capital | ₹303,458 | ₹357,556 |
Management reported gross margin of 28.85% (down 81 basis points) and operating margin of 17.20% (up 36 basis points). These disclosed margins use the company’s segment-revenue and other-operating-income presentation; they do not directly equal gross profit divided by IFRS-reported revenue. Cash and cash equivalents plus investments totaled ₹343,436 at year-end; management’s liquidity presentation of cash plus short-term investments was ₹334,134. Net cash under management’s measure—cash and investments less debt—was ₹256,092. The filing also cites ₹45,404 of unused credit lines, subject to lender consent and financial covenants.
Segment revenue was ₹594,041 for IT Services (+4.54%), ₹11,010 for IT Products (-10.58%) and ₹8,400 for ISRE (-1.69%). IT Products and ISRE reported segment losses of ₹282 and ₹1,822, respectively; IT Services segment results were ₹107,685 (+5.06%).
Material changes versus FY2019
- Revenue and attributable profit rose, while operating cash flow fell by ₹15,673. Management attributed the cash-flow decline mainly to higher working-capital requirements, partly offset by prior-year tax refunds.
- Employee compensation, the largest cost category, increased 10.94% to ₹279,356. Cost of revenue rose 5.58%, faster than reported revenue; gross margin consequently contracted.
- IT Services growth was led by BFSI, Consumer and Energy, Natural Resources and Utilities; Technology revenue declined 0.91%. Growth was partly offset by divestitures and an estimated COVID-19 revenue impact of ₹1,055–₹1,206.
- The company completed a ₹105,000 share buyback of 323.1 million shares at ₹325 per share. Financing cash outflow increased to ₹150,998, and outstanding shares fell to 5.713 billion.
- Wipro adopted IFRS 16 leases using the modified retrospective method. It recognized ₹16,748 of right-of-use assets and ₹19,198 of lease liabilities at year-end; comparative periods were not restated.
Outlook, risks and unusual items
- Outlook: Wipro provided no specific FY2021 revenue or earnings guidance in the supplied filing text. Management said the duration and effects of COVID-19 were uncertain, with possible customer project cancellations or delays, discounts, reduced technology spending, collection delays and increased working-capital needs. It said it believed available cash was sufficient for incremental working-capital needs and obligations.
- Response and strategy: Management emphasized digital, cloud, cybersecurity, automation and engineering investments, alongside cost actions including limiting non-critical hiring, redeploying and reskilling staff, reducing discretionary spending and optimizing subcontractor use. It deferred annual salary increases and progression cycles in response to the pandemic.
- Capital returns and investments: The ₹105,000 buyback was a major use of cash; the board recommended ₹1 per share as the final FY2020 dividend, matching the interim dividend already paid. Capital expenditure was ₹23,497, with ₹14,011 of related contractual commitments at year-end.
- Unusual items: Other operating income was ₹1,144 in FY2020, including ₹992 from a change in fair value of callable units related to the hosted data center sale and ₹152 from asset sales tied to the Workday and Cornerstone OnDemand businesses. FY2019 included ₹4,344 of gains on divestitures. FY2019 also included a ₹5,141 National Grid legal settlement; lower FY2020 administrative expenses partly reflected the absence of that charge.
- Contingencies: Disputed income-tax demands not recognized as debt totaled ₹77,873 at March 31, 2020; management expected its position to be upheld, but outcomes remain uncertain. Other disputed excise, customs, sales-tax and related demands totaled ₹8,033. The filing says pending legal matters are not expected to materially adversely affect the company, while noting that outcomes cannot be predicted with certainty.
- Principal risks: COVID-19 and customer credit/collections; wage inflation and employee retention; pricing pressure and fixed-price project cost estimates; foreign-exchange exposure; reliance on large clients and the Americas and Europe; cybersecurity and data privacy; government-contract working-capital cycles; tax disputes and incentives; and integration or impairment risks related to acquisitions and goodwill.
- Governance and audit: Deloitte issued an unqualified opinion on the IFRS financial statements and on internal control over financial reporting. The filing identifies fixed-price percentage-of-completion revenue estimates and allowance for credit losses as critical audit matters. The CEO/Managing Director transition was also underway: Abidali Neemuchwala’s resignation was effective June 1, 2020, and Thierry Delaporte was appointed to succeed him effective July 6, 2020, subject to stated approvals.
Important facts for investors to verify
- Confirm the relevant period: the filing is FY2020, not a standalone 2019 Q4 filing; distinguish IFRS-reported revenue of ₹610,232 from segment revenue of ₹613,401, which includes exchange-rate effects.
- Review the cash-flow and working-capital deterioration, including receivables, unbilled receivables and contract assets, and assess whether customer collections normalized after year-end.
- Assess the sustainability of reported margin and profit growth, separating divestiture-related income, prior-year settlement effects, currency movements and salary-cost inflation.
- Reconcile the ₹334,134 liquidity figure, ₹256,092 net-cash measure, ₹78,042 debt and ₹19,198 lease liabilities; verify credit-line availability and restrictions.
- Track the ₹77,873 disputed tax demands and other contingencies, the effect of expiring tax incentives, and any subsequent resolution or cash payment.
- Evaluate COVID-19 effects after March 31, 2020, including revenue, margins, cash conversion, credit-loss provisions and customer demand; the filing’s estimates reflect information available at its reporting date.
- Verify the execution and returns from the buyback, capital spending commitments, acquisitions, and the planned strategic shift toward digital and cloud services.