Genpact LTD (NYSE: G)

Sector: Technology Industry: Information Technology Services CIK: 0001398659
Market Cap 8.23 Bn
P/B 3.23
P/E 14.93
P/S 1.64
ROIC (Qtr) 14.25
Div Yield % 1.40
Rev 1y % (Qtr) 6.63
Total Debt (Qtr) 1.41 Bn
Debt/Equity (Qtr) 0.55

About

Genpact Ltd, a global professional services and solutions firm, operates in the business transformation industry under the stock symbol G. The company's main business activities revolve around digital-led innovation and running digitally-enabled operations for its clients, with a presence in over 35 countries and a workforce of approximately 129,100 employees. Genpact's services cater to a wide range of industries, including financial services, consumer and healthcare, and high tech and manufacturing. Genpact generates revenue through its two primary...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 729.41M provides robust 0.52x coverage of total debt 1.41B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 729.41M provides exceptional 14.96x coverage of interest expenses 48.76M, showing strong debt service capability.
  • Robust free cash flow of 644.90M exceeds capital expenditure of 84.50M by 7.63x, indicating strong organic growth funding capability.
  • Free cash flow of 644.90M provides exceptional 13.23x coverage of interest expense 48.76M, showing strong debt service ability.
  • Operating cash flow of 729.41M fully covers other non-current liabilities 376.53M by 1.94x, showing strong long-term stability.

Bear case

  • Operating cash flow of 729.41M barely covers its investment activities of (164.89M), with a coverage ratio of -4.42, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 729.41M provides thin coverage of dividend payments of (115.40M) with a -6.32 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 740.76M provide limited coverage of acquisition spending of (80.38M), which is -9.22x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 644.90M represents just -1.48x of debt issuance (436.17M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 729.41M is outpaced by equity issuance of (248.64M) (-2.93 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 279.99 Bn 35.41 4.28 66.57 Bn
2 ACN Accenture plc 168.17 Bn 22.09 2.38 8.20 Bn
3 INFY Infosys Ltd 74.96 Bn 23.74 3.89 -
4 CTSH Cognizant Technology Solutions Corp 41.45 Bn 19.48 1.99 1.17 Bn
5 FIS Fidelity National Information Services, Inc. 35.21 Bn 231.62 3.36 13.00 Bn
6 WIT Wipro Ltd 29.93 Bn 19.70 2.97 1.95 Bn
7 BR Broadridge Financial Solutions, Inc. 26.38 Bn 28.51 3.74 3.28 Bn
8 LDOS Leidos Holdings, Inc. 23.72 Bn 16.88 1.37 5.23 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.69 1.44
EV to Cash from Ops. EV/CFO 12.45 5.63
EV to Debt EV to Debt 6.44 8.06
EV to EBIT EV/EBIT 11.75 -4.05
EV to EBITDA EV/EBITDA 10.83 -0.52
EV to Free Cash Flow [EV/FCF] EV/FCF 14.08 -1.66
EV to Market Cap EV to Market Cap 1.10 1.35
EV to Revenue EV/Rev 1.81 57.14
Price to Book Value [P/B] P/B 3.23 3.34
Price to Earnings [P/E] P/E 14.93 -5.47
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.78 -0.83
Dividend Payout Ratio % Div Payout % (Qtr) 21.00 0.66
Dividend per Basic Share Div per Share (Qtr) 0.66 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 17.82 6.24
Interest Coverage Int. cover (Qtr) 15.84 -319.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -1.10 -253.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -27.56 114.15
Dividend Growth (1y) % Div 1y % (Qtr) 11.26 35.23
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -17.46 -22.49
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 8.59 -25.03
EBIT Growth (1y) % EBIT 1y % (Qtr) 10.09 -82.44
EBT Growth (1y) % EBT 1y % (Qtr) 10.89 97.07
EPS Growth (1y) % EPS 1y % (Qtr) -14.13 147.29
FCF Growth (1y) % FCF 1y % (Qtr) 23.90 -8,638.64
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.64 -8.24
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.93 0.78
Cash Payout Ratio Cash Payout (Qtr) 0.14 0.01
Cash Ratio Cash Ratio (Qtr) 0.51 0.66
Current Ratio Curr Ratio (Qtr) 1.51 2.12
Debt to Equity Ratio Debt/Equity (Qtr) 0.55 0.88
Interest Cover Ratio Int Coverage (Qtr) 15.84 -319.17
Times Interest Earned Times Interest Earned (Qtr) 15.84 -319.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.30 -550.76
EBIT Margin % EBIT Margin % (Qtr) 15.42 -775.74
EBT Margin % EBT Margin % (Qtr) 14.45 -827.89
Gross Margin % Gross Margin % (Qtr) 35.80 24.07
Net Profit Margin % Net Margin % (Qtr) 11.00 -830.34