Genpact (G) AI Stock Analysis

• Market Cap: $8.45B
• Dividend Yield: 1.3%
• Average Volume (3M): 1.52M
• Price to Earnings (P/E): 16.9
• Beta (1Y): 0.87
• Revenue Growth: 6.46%
• EPS Growth: -16.94%
• Country: US
• Employees: 140,000
• Sector: Technology
• Sector Strength: 49
• Industry: Information Technology Services
• EPS (TTM): 2.85
• Shares Outstanding: 174,870,930
• 10 Day Avg. Volume: 1,678,249
• 30 Day Avg. Volume: 1,522,258
• PEG Ratio: 0.22
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.84
• Price to Cash Flow (P/CF): 10.80
• P/FCF Ratio: 8.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $57.56
• Price Target Upside: 21.69% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Genpact's overall score of 80 reflects its solid financial health, positive technical indicators, and strong earnings guidance. The company's robust revenue growth and successful AI initiatives are significant strengths, though mixed performance across segments and visibility challenges in non-annuitized business pose risks. The fair valuation and dividend yield provide additional stability.

Positive Factors

AI Transformation

The company's '3+1' AI transformation plan is driving the company's turnaround.

Capital Allocation Strategy

Genpact announced an 11% increase to its quarterly dividend and raised the buyback authorization by $500 million, highlighting management's efficient capital allocation strategy.

Earnings

Genpact delivered strong 4Q24 results and FY25 guidance on both the top and bottom lines.

Revenue Growth

Genpact grew total revenues by 8.7% y/y CC, which was about 200bps above the high end of guidance.

Negative Factors

Growth Durability Concerns

There is a question about the durability of growth longer term, particularly related to generative AI impact.

Traditional BPO Exposure

The company's still-high exposure to traditional BPO remains a concern over the medium-term.

Genpact Business Overview & Revenue Model

Company Description

Genpact Limited provides business process outsourcing and information technology (IT) services in India, rest of Asia, North and Latin America, and Europe. It operates through three segments: Banking, Capital Markets and Insurance; Consumer Goods, Retail, Life Sciences and Healthcare; and High Tech, Manufacturing and Services. The company offers CFO advisory services; and environmental, social, and governance (ESG) services, such as data management, carbon accounting, human rights assessment, sustainability diligence, and ESG reporting. It also provides finance and accounting services, which include accounts payable, such as document management, invoice processing, approval and resolution management, and travel and expense processing; invoice-to-cash services, including customer master data management, credit and contract management, fulfillment, billing, collections, and dispute management services; record to report services comprising accounting, treasury, tax, product cost accounting, and closing and reporting services; financial planning and analysis consisting of budgeting, forecasting, and business performance reporting; and enterprise risk and compliance services, including operational risks and controls. In addition, the company provides supply chain advisory services, and after-sales services; sourcing and procurement services comprising direct and indirect strategic sourcing, category management, spend analytics, procurement operation, and master data management; and sales and commercial services, including campaign, order, and dispute management, lead generation, pricing, and promotion optimization. Further, it offers IT services, which comprise end-user computing support, infrastructure management, application production support, and database management services; and transformation services that include digital solutions, consulting services, and analytics services and solutions. The company was founded in 1997 and is based in Hamilton, Bermuda.

How the Company Makes Money

Genpact generates revenue through a combination of service contracts with its clients, primarily focusing on long-term engagements for business process outsourcing (BPO), information technology services, and consulting. The company's key revenue streams include fees for managed services, project-based consulting, and implementation of digital solutions. Genpact partners with a wide array of industries such as banking, insurance, healthcare, manufacturing, and consumer goods, tailoring its solutions to meet specific industry needs. Additionally, strategic partnerships with technology providers and software vendors play a significant role in enhancing Genpact's service offerings, thereby contributing to its revenue growth.

Genpact Financial Statement Overview

Summary

Genpact exhibits robust financial health characterized by steady revenue and profit growth, strong operating margins, and improved leverage ratios. The company has effectively managed its cash flows, enhancing its ability to fund operations and growth. While the decrease in net profit margin is a concern, overall, the financial position remains strong with a positive outlook.

Income Statement

Genpact has shown consistent revenue growth over the years with a Revenue Growth Rate of 6.48% in the latest year. The Gross Profit Margin stands at a solid 35.44%, reflecting efficient cost management. However, the Net Profit Margin decreased to 10.77% compared to the previous year, mainly due to increased expenses. The EBIT and EBITDA margins are healthy at 14.72% and 14.72% respectively, indicating strong operating performance.

Balance Sheet

The company's Debt-to-Equity Ratio has significantly improved to 0.10, indicating reduced financial leverage. The Return on Equity is robust at 21.49%, showcasing effective utilization of shareholder funds. The Equity Ratio improved to 47.92%, indicating a strong capital structure with an increased proportion of equity financing.

Cash Flow

Genpact's Free Cash Flow grew by 23.28%, demonstrating an improvement in cash generation capabilities. The Operating Cash Flow to Net Income Ratio stands at 1.20, reflecting strong cash flow generation relative to net earnings. The Free Cash Flow to Net Income Ratio is 1.04, indicating efficient cash flow management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.77B	4.48B	4.37B	4.02B	3.71B
	Gross Profit
1.69B	1.57B	1.54B	1.43B	1.29B
	EBIT
702.06M	630.86M	502.15M	509.00M	438.72M
	EBITDA
852.58M	769.77M	639.50M	684.98M	612.14M
	Net Income Common Stockholders
513.67M	631.25M	353.40M	369.45M	308.28M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
671.61M	583.67M	646.76M	899.46M	680.44M
	Total Assets
4.99B	4.81B	4.59B	4.98B	4.87B
	Total Debt
232.43M	1.50B	1.67B	1.97B	1.94B
	Net Debt
-415.81M	919.33M	1.02B	1.07B	1.26B
	Total Liabilities
2.60B	2.56B	2.76B	3.08B	3.04B
	Stockholders Equity
2.39B	2.25B	1.83B	1.90B	1.83B
Cash Flow		Free Cash Flow
532.66M	432.04M	389.28M	637.03M	503.94M
	Operating Cash Flow
615.42M	490.81M	443.67M	694.28M	584.31M
	Investing Cash Flow
-105.96M	-78.94M	-36.59M	-122.75M	-266.40M
	Financing Cash Flow
-424.85M	-483.00M	-571.40M	-332.88M	-92.01M

Genpact Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 47.30
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For G, the sentiment is Negative. The current price of 47.3 is below the 20-day moving average (MA) of 49.22, below the 50-day MA of 50.89, and above the 200-day MA of 42.35, indicating a neutral trend. The MACD of -0.14 indicates Positive momentum. The RSI at 50.21 is Neutral, neither overbought nor oversold. The STOCH value of 61.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for G.

Genpact Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CACI	80 Outperform	$9.04B	19.35	13.79%	―	14.04%	29.08%
G	80 Outperform	$8.45B	16.90	22.15%	1.30%	6.46%	-16.94%
EXLS	79 Outperform	$7.14B	37.08	21.80%	―	12.74%	9.92%
DLB	72 Outperform	$7.17B	27.43	10.82%	1.69%	2.71%	39.56%
WNS	72 Outperform	$3.05B	21.65	16.64%	―	1.07%	-13.39%
EPAM	69 Neutral	$9.07B	18.66	12.80%	―	0.80%	10.05%
Sector *	57 Neutral	$19.52B	9.58	-12.47%	2.79%	5.43%	-24.71%