S&P assigns ‘BBB’ to Wipro on better financial health

Global rating agency Standard & Poor’s (S&P) today assigned its ‘BBB’ corporate credit rating to Wipro Ltd, the country’s third largest software exporter, implying better financial health and cost efficiency.

“We have rated Wipro higher than India’s sovereign rating (BBB-/Negative/A-3) because we believe the company would be able to service its debt even if the sovereign defaults on its obligation,” S&P said in a statement.

The rating, which falls under investment grade, reflects S&P’s view of the company’s modest financial risk profile, superior cost efficiency, relatively weak business profile of the company’s non-IT service business, and exposure to foreign exchange fluctuations, it said.

Wipro also has other businesses including consumer care, lighting and infrastructure.

For the year ended March 31, 2009, the IT services contributed about 75 per cent to Wipro’s total revenues of $5 billion.

“Wipro’s IT service business has a competitive advantage from its experience of operating global delivery models with a majority of the workforce based in low cost countries, especially India,” said Standard & Poor’s credit analyst, managing director –Corporate & Government Ratings, South and South East Asia, Suzanne Smith.