Fitch Confirms Wipro and HCL Tech’s Long-Term “A-” Rating, Stable Outlook

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Fitch Ratings affirmed the long-term issuer default ratings (IDRs) in foreign and local currencies at “A-” for Indian IT companies Wipro Ltd and HCL Technologies, reflecting a strong market position.

The outlook for the instruments of the two IT companies is stable.



The rating agency said in a statement that it had affirmed Wipro’s senior unsecured rating of ‘A-‘ and the ‘A-‘ rating on the $750 million senior notes due 2026 issued by Wipro IT. Services, LLC and guaranteed by Wipro.

The ratings reflect Wipro’s strong market position in the global IT services industry, improving business performance, robust industry growth, stable profitability and cash generation, and conservative capital structure. He expected Wipro to maintain net cash over the medium term.

Its turnover narrowed the gap. The revenue gap with HCL, Wipro’s closest peer, narrowed to 8% in the nine months of the fiscal year to March 2022 (9MFY22), from 22% in 9MFY21. A management shake-up in 2020 and a reorganization in 2021 resulted in strong growth.

Growth has been stronger than the industry average and top peers and I believe Wipro will continue to close the revenue gap with its peers through organic and inorganic growth, he added.

As HCL Tech, he said HCL became India’s third largest IT services company by revenue after Tata Consultancy Services and Infosys when it overtook Wipro from the fiscal year ended March 2019 (FY19). HCL has a strong, diversified presence globally and provides comprehensive IT services to an established customer base.

HCL Tech has strong profitability and cash generation and its rating is supported by strong profitability and strong operating cash generation. The company’s EBITDA margin is expected to be approximately 23% in the medium term, down from 26% in FY21, due to intense competition for talent, reversal of pandemic and a change in the range of services.

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