Wipro Ltd. Stock Downgraded (WIT)

NEW YORK (TheStreet) -- Wipro (NYSE:WIT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and deteriorating net income.

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Highlights from the ratings report include:

• WIT's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.39, which illustrates the ability to avoid short-term cash problems.
• Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.7%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
• The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the IT Services industry and the overall market on the basis of return on equity, WIPRO LTD has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
• The gross profit margin for WIPRO LTD is currently lower than what is desirable, coming in at 30.50%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.10% is above that of the industry average.

Wipro Limited provides information technology (IT) products and services, and consumer care and lighting products primarily in India, the United States, and Europe. The company operates in four segments: IT Services, IT Products, Consumer Care and Lighting, and Other. The company has a P/E ratio of 17.3, below the average computer software & services industry P/E ratio of 17.4 and below the S&P 500 P/E ratio of 17.7. Wipro has a market cap of $19.1 billion and is part of the technology sector and computer software & services industry. Shares are down 24.3% year to date as of the close of trading on Thursday.

You can view the full Wipro Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

For more information on Wipro Ltd. click any of the following:

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