Rationale

 The revision in the outlook of the long-term rating of IBM India Private Limited (IBM India) to Stable from Negative factors in the strengthening credit profile of its ultimate parent, International Business Machines Corporation1 , USA (IBM Corporation/the parent). IBM Corporation is expected to report strong EBITDA growth and a healthy financial profile, characterised by a strong cash position relative to debt. The reaffirmation of the ratings of IBM India factors in the expected sustenance of its healthy financial profile, while also factoring in the strong parentage of IBM Corporation. IBM India derives more than 70% of its revenues from services provided to the parent and fellow subsidiaries, which is expected to continue going forward. While the company’s share in the overall revenues of IBM Corporation is relatively low, at around 6%, India remains a key global delivery centre for the parent, and IBM India contributes nearly one-third of its global workforce. Accordingly, the ratings factor in implicit support from IBM Corporation, given the strong linkages between the parent and the subsidiary. The ratings continue to reflect IBM India’s established position in the domestic IT industry and access to IBM Corporation’s technical expertise and capabilities. Further, the ratings favourably factor in IBM India’s strong financial profile, characterised by its healthy and stable earnings and cash flows, net debt-free status and strong liquidity profile. The company reported a consolidated operating income of Rs. 32,935.1 crore in FY2025 and Rs. 17,520 crore in H1 FY20262 , representing a YoY growth of 7.9% and 6.4% (annualised), respectively, aided by improvement in performance across segments, in both export and domestic businesses, growth in IBM’s addressable market in India, and favourable forex movements. The company’s operating profit margins (OPM) remained healthy at 15.1% in H1 FY2026 and 18.2% in FY2025 (FY2024: 17.7%). IBM India remained net debt negative, with free cash and bank balances of over Rs. 11,000 crore as of September 30, 2025. Overall, ICRA expects the company’s revenue growth to continue, supported by increased adoption of automation and artificial intelligence over the medium term. Margins are expected to remain healthy going forward as well; however, the company remains exposed to challenges such as forex fluctuations, employee attrition, and policy changes in key operating markets, like other industry players. Further, ICRA expects IBM India to remain net debt negative over the medium term, despite any potential dividend payouts and payments towards any unfavourable outcomes related to tax disputes. The company is open to acquisitions in related verticals. Any acquisitions, upon materialisation, would be evaluated on a case-by-case basis.