Genpact Ltd.

The stable outlook on Genpact reflects our expectation that the company will maintain its competitive position and above-average profitability over the next 12-18 months. We also expect Genpact's sizable free operating cash flows to help the company maintain its leverage at current levels despite high shareholder distributions. We are likely to lower the rating if Genpact's EBITDA margin approaches 15% sustainably, possibly because of: (1) rising costs owing to a greater onshore presence; (2) slower growth in transformation services from global clients than we anticipate; or (3) increased competition. We may also lower our rating if Genpact's debt-fueled shareholder distributions or acquisitions are beyond our expectation, resulting in the debt-to-EBITDA ratio moving above 2.5x on a sustainable basis. An increase

...Solid client relationships in a niche business process outsourcing (BPO) services segment a key support.We attribute Genpact Ltd.'s good operating performance to its dominant position in the outsourced finance and accounting services space, and its significant share of annuity-based revenues. As of March 31, 2019, the company has over 75% of its revenue in the form of annuity. Genpact's about U$3.9 billion of new bookings in 2018 ensure good revenue visibility. This factor, along with healthy client relationships, should support growth over the next two years as the company looks to enhance its scale and integrate new-age digital and transformation services with its core service offerings. Genpact's small operating scale and services offerings in the highly competitive IT services industry constrain its business position. The company's presence in a niche BPO service segment restricts its scalability, in our view. Genpact's revenues, at US$3.1 billion in the 12 months ending March 31, 2019,...

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