Genpact (G) AI Stock Analysis

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Genpact

(NYSE:G)

78Outperform

Genpact's overall stock score reflects its solid financial performance and positive earnings outlook. Despite some technical weaknesses, the company's strong revenue growth, AI initiatives, and operational efficiency contribute positively. The reasonable valuation and positive sentiment from the earnings call further support the stock's attractiveness, making it a well-rounded investment option in the Information Technology Services sector.

Positive Factors

AI Transformation

The '3+1' AI transformation plan is driving a significant turnaround for Genpact.

Capital Allocation

Genpact announced an 11% increase to its quarterly dividend and expanded its buyback authorization by $500 million, showcasing a shareholder-friendly capital strategy.

Earnings and Guidance

Genpact delivered both strong results and guidance, surpassing expectations on the top and bottom lines.

Negative Factors

Growth Durability

There is uncertainty about the long-term durability of growth, especially with the impact of generative AI.

Investment Impact

Potential revenue outperformance might be offset by investments, which could limit margin upside.

Traditional BPO Exposure

Genpact's high exposure to traditional BPO remains a medium-term concern.

Genpact (G) vs. S&P 500 (SPY)

Market Cap

$8.69B

Dividend Yield1.26%

Average Volume (3M)1.44M

Price to Earnings (P/E)17.5

Beta (1Y)0.79

Revenue Growth6.46%

EPS Growth-16.94%

CountryUS

Employees140,000

SectorTechnology

Sector Strength68

IndustryInformation Technology Services

Share Statistics

EPS (TTM)2.85

Shares Outstanding174,870,930

10 Day Avg. Volume1,228,874

30 Day Avg. Volume1,442,574

Financial Highlights & Ratios

PEG Ratio0.22

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.97

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit5.01

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$56.22

Price Target Upside13.10% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

Genpact Business Overview & Revenue Model

Company DescriptionGenpact (G) is a global professional services firm that specializes in delivering digital transformation solutions to its clients. Operating primarily in the sectors of finance and accounting, supply chain management, procurement, information technology, and customer service, Genpact leverages its extensive expertise in process management and digital technologies to help businesses enhance their operational efficiencies. The company provides a comprehensive range of services including analytics, automation, and artificial intelligence, aimed at optimizing business processes and driving growth for its clients.

How the Company Makes MoneyGenpact 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 Key Performance Indicators (KPIs)

Any

Number of Clients Greater Than $25m Revenue

Number of Clients Greater Than $25m Revenue
Shows the count of large clients, reflecting the company's success in securing high-value contracts and its reliance on major revenue sources.

Chart InsightsGenpact has steadily increased its number of high-revenue clients, reaching 43 by Q3 2024, reflecting successful client acquisition and retention strategies. The latest earnings call underscores this momentum, highlighting strong revenue growth, significant new bookings, and successful AI initiatives. Despite some challenges in segment performance, the company's focus on operational efficiency and AI-driven transformation positions it well for continued expansion, as evidenced by its positive revenue and earnings guidance for 2025.

Data provided by:

Main Street Data

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

Very Positive

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

Positive

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

Very Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Positive

Last Price49.71

Price Trends

50DMA

49.65

Positive

100DMA

48.11

Positive

200DMA

43.51

Positive

Market Momentum

MACD

>-0.01

Negative

RSI

55.83

Neutral

STOCH

83.16

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For G, the sentiment is Positive. The current price of 49.71 is above the 20-day moving average (MA) of 47.81, above the 50-day MA of 49.65, and above the 200-day MA of 43.51, indicating a bullish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 55.83 is Neutral, neither overbought nor oversold. The STOCH value of 83.16 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for G.

Genpact Risk Analysis

Genpact disclosed 43 risk factors in its most recent earnings report. Genpact reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Genpact Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EXLS	78 Outperform	$7.63B	35.40	23.81%	―	14.18%	21.49%
G	78 Outperform	$8.69B	17.46	22.15%	1.26%	6.46%	-16.94%
CACI	76 Outperform	$10.19B	21.86	13.48%	―	14.16%	22.25%
EPAM	73 Outperform	$9.08B	20.45	12.80%	―	0.80%	10.05%
DLB	72 Outperform	$7.22B	27.62	10.28%	1.68%	2.71%	39.56%
WNS	72 Outperform	$2.76B	15.37	21.21%	―	-0.64%	30.96%
Sector *	60 Neutral	$10.94B	10.58	-7.08%	2.98%	7.52%	-12.04%

* Technology Sector Average

Performance Comparison

Genpact

49.71

17.91

56.32%

CACI

Caci International

463.17

39.42

9.30%

DLB

Dolby Laboratories

74.87

-5.84

-7.24%

EPAM

Epam Systems

160.36

-86.03

-34.92%

EXLS

Exlservice Holdings

46.87

16.95

56.65%

WNS

59.69

10.95

22.47%

Genpact Earnings Call Summary

Earnings Call Date:Feb 06, 2025

(Q4-2024)

% Change Since: 0.98%|

Next Earnings Date:May 07, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue growth, significant new bookings, and successful AI initiatives. Despite some challenges with segment performance and visibility into non-annuitized business, the overall sentiment was positive due to operational efficiency and innovative advancements.

Q4-2024 Updates

Positive Updates

Strong Revenue Growth

Q4 revenue reached $1.25 billion, up 9% year over year. Full-year revenue grew 6.5%, exceeding initial guidance by 400 basis points.

Datatech AI Performance

Datatech AI revenue increased by 12% year over year in Q4, showing continuous growth for four consecutive quarters.

Operational Efficiency and Profitability

Gross margin expanded 10 basis points in Q4, with an adjusted operating income margin of 17.7%. Full-year operating cash flow grew 25%.

Significant New Bookings

2024 ended with $5.7 billion in new bookings, a 15% increase year over year.

Launch of AI Initiatives

Introduced Gen AI solutions, AI Value Studio, and the GigaFactory to enhance AI-driven transformation.

Negative Updates

Mixed Performance Across Segments

While Consumer and Healthcare revenue increased by 11%, High-Tech and Manufacturing, and Financial Services grew at a slower pace of 9% and 6% respectively in Q4.

Challenges with Annuitized Business

25% of the business revenue requires conversion from pipeline to bookings each quarter, which presents visibility challenges.

Company Guidance

During the Genpact Limited Q4 2024 earnings call, the company provided detailed guidance for 2025, projecting full-year revenue growth between 5.5% and 7.7%, with a midpoint growth of 6.5% on an as-reported basis. In constant currency terms, revenue growth is expected to be approximately 7.2% at the midpoint. Genpact anticipates a gross margin of 36% and an adjusted operating income (AOI) margin of 17.3% for the full year, indicating an expansion over 2024. The company expects adjusted diluted EPS to grow by 9% at the midpoint. For the first quarter of 2025, Genpact forecasts net revenue growth between 6.2% and 7.2% on an as-reported basis, or 7.6% at the midpoint in constant currency terms, with a gross margin of 35% and adjusted diluted EPS in the range of $0.79 to $0.80, a 9% increase at the midpoint compared to Q1 of the previous year. The company plans to reinvest any revenue upside back into the business to drive future growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.