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Research
Views on Wipro-To acquire Viteos Group: Angel Broking
Posted On : 2015-12-24 10:31:08( TIMEZONE : IST )
Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on:
Wipro-To acquire Viteos Group
"Wipro has signed a definitive agreement to acquire Viteos Group, a BPaaS provider for the Alternative Investment Management Industry for a purchase consideration of US$130mn.Viteos was founded in 2003 and is headquartered at Somerset, New Jersey. The Viteos Group provides customized straight-through-processing and integrates post-trade operations across every asset class, currency, border or structure for the alternative investment management industry in the United States, Europe and Asia. It is a leader in shadow-accounting services and offers a full range of middle and back-office outsourcing through its 400+ employees.
Wipro currently is one of the leading providers of Business Process Services (BPS) to some of the global investment banks. Wipro specializes in Platform-led Transformation and Utility-based Offerings in Reconciliation, KYC, Settlements, Middle Office, Asset Servicing, Syndicated Loans and Reference Data Solutions, with coverage across asset classes. These credentials of Wipro are primarily on the Sell-Side and this acquisition will add similar capabilities on the Buy- Side.
The company had revenue of US$26.5mn in FY2014-15. Thus, the company is valued at Market cap to sales at 4.9xFY2015, which looks on the higher side; unless the company is accompanied by higher ROE's which can be sustained over a long term. The acquisition is subject to customary closing conditions and regulatory approvals and will be completed in the quarter ending March 31, 2016, thus will fully reflect in FY2017 numbers( will add 0.3% of sales in FY2017E). Thus, the acquisitions are unlikely to add to the net profit significantly and given the Debt to Equity the acquisition is unlikely to be uncomfortable. The company had cash of ~INR 16,000cr in FY2014-15. We maintain our BUY rating on the stock with a target of INR 719."
Shares of WIPRO LTD. was last trading in BSE at Rs.555.95 as compared to the previous close of Rs. 555.8. The total number of shares traded during the day was 31397 in over 1196 trades.
The stock hit an intraday high of Rs. 559.9 and intraday low of 554.5. The net turnover during the day was Rs. 17487561.
