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, absent significant acquisitions. We may lower our rating on Wipro if: (1) its business position weakens such that its EBITDA margins fall materially below 20%; or (2) the company significantly increases its leverage, with the ratio of debt to EBITDA rising above 1.5x, possibly because of acquisitions or higher dividend distributions. An improvement in Wipro's scale and profitability to levels comparable with larger offshore IT peers would be critical for an upgrade. Indications of such an improvement would be the company: (1) significantly improving its operating scale and strengthens EBITDA

...Growth for Wipro Ltd. (Wipro) is likely to accelerate in fiscal 2022 (year ending March 31, 2022). This will be aided by good deal wins, resilient demand for information technology (IT) services, and the acquisition of The Capital Markets Company (UK) Ltd. (Capco) in April 2021. We estimate revenue of the global IT services industry will grow by 3% in 2021. Demand for cloud-based offerings and digitization of IT infrastructure are likely to remain resilient over the next year. At the same time, we see a revival in discretionary project spending, which had been put on hold amid uncertain business conditions through 2020. We believe Wipro's investments in digital offerings, including the acquisition of Capco, position it well to cater to this demand and support growth. We estimate the company's total revenues will be about Indian rupee (INR) 715 billion in fiscal 2022 compared with INR619 billion in fiscal 2021. Capco, which specializes in digital transformation in the financial services...

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