Wipro might be a global provider of software services to The kings and emproors of business.
However from an average Investor point of view it doesnt make sense to buy a stock that is SO EXPENSIVE!
I for one personally belive that an investor friendly company is that one which has a large pool of Investors , however in the case of Wipro its is alarming to note that nearly 74% of the company is still held by one guy AZIM PREMJI, NO ME IZ NOT an azim basher
However I feel for the following reasons , this is a dicey stock to hold.
1] It is still the most expensive stock in the Indian bourses trading at almost 52 times (150+ during peak) times its earnings!
2] Achha, assuming that this is true, when the market is giving you such crazy valuation shouldnt you use it to buy out other companies and thus try to really give ’Growth’.Since now Organic Growth is a thing of the past
3] its free float of 18.5 % still makes it one of the least free float shares , giving chance to small groups and brokers to form cartels and jack up the price.
4] Its export to sales ratio is increasing steadily , good (was 30 % in 98 21 % in 99 and 45% in 2000) but so is its import to sales which is also a point to be noted.
5] And most importantly a basket of comapnies that deal in vegetable oil , light appliances and IT Services !!! wel well a queer mix indeed
6] Now this is a point which I have noted and I am really surprised about(actually concerned), especially when you compare with their peers Their Forex Inflow and out flow
Forex Inflow (99, 00, 01)Rs m 4, 179 6, 525 10, 506
Forex Out flow (99, 00, 01) Rs m 3, 876 4, 069 8, 274
7] Wipro apparently has had the highest attrition rate in the Industry, what They lose their top management to dot coms?
But this doubting thomas doubted every thing , and belived that only the paranoid Survive
Venkat