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. The company's healthy operating cash flows and limited discretionary spending should help keep its debt-to-EBITDA ratio below 2.5x over this period. We are likely to lower the rating if Genpact's EBITDA margin approaches 15% sustainably, possibly because of: (1) cost pressures; (2) slower growth 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. We see limited potential for an upgrade given Genpact's small operating scale and

...The information technology (IT) software and services industry is likely to face a lagged impact from the COVID-19 pandemic. We anticipate lower demand for IT software and services globally over the next few quarters stemming from a gloomy macroeconomic outlook. The industry has remained fairly resilient with a smooth transition to remote working amid the lockdowns imposed by governments across global markets to contain the spread. However, markets are opening up gradually and business activity is resuming now. Yet, we anticipate clients will reduce their discretionary spending because a decline in consumption is likely to affect new business growth. We expect Genpact Ltd.'s growth to slow down to below 5% over the next two years, from 10% in 2018 and 17% in 2019. Genpact's exposure to the hard-hit travel and tourism, hospitality, and retail sectors is low. Similar to some of its Indian peers, Genpact generated around 30% of its revenues from clients in the banking, capital markets and...

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