Wipro Ltd.

The stable outlook on Wipro reflects our view that the company will maintain its good competitive position and profitability, and a net cash positive position over the next 24 months. In an unlikely scenario, we may lower our rating on Wipro if: (1) its business position weakens with the loss of major clients or inability to scale up its growing digital business; or (2) the company significantly increases its leverage, with the ratio of net debt to EBITDA rising above 1.5x, possibly because of acquisitions or higher dividend distributions. We view an upgrade of Wipro in the next 18-24 months as unlikely because of the company's lower scale and profitability than its larger offshore IT peers. However, we may raise

...Wipro benefits from its good market position and revenue diversity. We believe Wipro Ltd.'s good market position should support its growth over the next few years. Wipro will continue to benefit from its broad information technology (IT) service offerings especially as it integrates new-age digital services such as cloud, big data, and artificial intelligence (AI)-based analytics with its existing solutions. This should help partly offset the slowdown in traditional outsourcing services. At the same time, we also expect the company's diversified clientele to provide stability in earnings through sectoral downtrends and business cycles. As of March 31, 2019, Wipro had more than 1,100 clients across banking, financial services, and insurance (BFSI); consumer; energy, natural resources and utilities; communications and manufacturing; and technology verticals in addition to healthcare. Access to a large relatively low cost workforce from India and automation will continue to support Wipro's...

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