Numbers

Claude View

The Numbers

Why does G trade here today? Genpact is being valued as a melting-ice-cube BPO ($6.2B market cap, ~12x trailing earnings, 1.4x EV/Sales, 8.3x EV/EBITDA) despite generating $725M of free cash flow, growing revenue 6.6% in FY25, and carrying a clean 0.9x net debt/EBITDA balance sheet. The market is paying for the 76% of revenue it calls "Core Business Services" (3.7% growth, structurally GenAI-exposed) and assigning almost zero premium for the 24% "Advanced Technology Solutions" segment growing 17% — the segment that would justify an EXLS-like 2.4x EV/Sales rerating. The single metric most likely to rerate or derate the stock is ATS revenue mix: every 300bps of mix shift toward ATS (at constant group margin) is worth roughly a full turn of EV/Sales if the market believes the mix durable. Secondary catalyst: new-bookings book-to-bill — FY25 bookings fell to $5.5B from $5.7B, which leads reported revenue by 3–4 quarters.

Price & Valuation Snapshot

The stock peaked at $50.26 on 2025-04-30 and touched a 52-week low of $34.18 on 2026-04-10 — a 32% peak-to-trough drawdown. Two air-pockets mark the narrative: the early-May 2025 gap from ~$49 to ~$42 (post-Q1 print / macro) and the February 2026 gap from $44 to $37 on the FY25 full-year print that missed consensus EPS ($3.13 vs $3.23E) despite 6.6% revenue growth.

Revenue & Earnings Power

The FY23 net income spike ($631M) is an artifact of a one-time ~$190M tax benefit. Adjusted, FY23 net income was ~$440M and the underlying earnings trajectory has compounded into FY25's $552M. FY23 is also where operating margin re-based ~250bps lower as wage inflation outpaced pricing — margins have held at 14.7–14.8% since but have not recovered to the FY22 peak. Sell-side models a gradual expansion back toward 15.2% by FY27.

Quarterly Trajectory

Revenue has grown every quarter from $1,089M (2023-Q1) to $1,319M (2025-Q4), a 21% two-year build. Margins traced a clean recovery through FY24 (13.3% to 15.2%) and then stopped expanding — the Q2/Q3/Q4 2025 prints of 14.3% / 14.8% / 14.8% are the problem for the bull case. That is why the FY25 EPS missed: it was a margin-expansion miss, not a top-line miss.

Earnings surprise (most recent print)

Cash Generation

FY25 free cash flow of $725M is a ~36% jump over FY24 and the highest absolute print in company history. Capex is trivial (~$78M, ~1.5% of revenue) — an asset-light services model where "investment" flows through the P&L as headcount. The cash quality is genuine: SBC is only ~$90M (1.8% of revenue), so SBC-adjusted FCF yield is still 10.2% — exceptional for a 7%-growth business. Net-income-to-FCF conversion of 131% reflects working-capital release and D&A > capex, and this is the single strongest pillar of the bull thesis that the price tape is ignoring.

Capital allocation — consistent return of capital

FY25 buybacks dropped to $97M from $235M in FY24 — cash instead funded the XponentL acquisition ($160M) and $314M of incremental net debt/investments. Dividend was raised 11.5% to $0.68/share (FY24: $0.61), yielding 1.9% at current price. Payout ratio is a disciplined ~21%.

Balance Sheet

Cash + short-term investments rose to $1.2B in FY25 (adding back $350M of current investments to $854M cash), while total debt rose to $1.93B reflecting new financing for XponentL and general balance-sheet optionality. Net debt/EBITDA is 0.86x — zero leverage stress. The company could comfortably fund a $500M–$1B incremental buyback or acquisition without credit-rating impact. Interest coverage is 10.9x.

Shares outstanding

Share count has fallen from ~185M to ~170M — the cleanest boost to per-share economics. At $36.65, every $100M of buyback retires ~2.7M shares.

Industry-Specific Metrics (Warren's scorecard)

Returns on Capital

ROIC stepped down sharply from 28.8% to 17.5% in FY25. The primary driver is mechanical — goodwill and intangibles grew to $1.85B (+9% YoY) on the XponentL transaction while earnings from that acquired business have not yet fully ramped. ROE held at 21.7% because buybacks shrank the equity base in step with net income. The question to monitor: does ROIC rebuild toward 20%+ by FY27 as ATS margins scale, or does it settle at ~15% indicating capital was mis-allocated?

Peer Comparison

Top Institutional Holders (partial)

What the Numbers Confirm, Contradict, and Demand

Confirm. The business is a cash machine: $725M FCF, 11.6% FCF yield, 0.86x net debt/EBITDA, ~$215M/year returned to shareholders via buybacks + dividends. ATS is accelerating (17% growth). Revenue has compounded cleanly to a record $5.1B.

Contradict. The narrative says "AI pivot real"; the FY25 margin trajectory (stalled at 14.8%) and the FY25 EPS miss ($3.13 vs $3.23E) say "not yet". ROIC stepped down to 17.5% from 28.8% — the XponentL deal has not yet earned its capital. Bookings fell $200M YoY — the leading indicator is soft.

Watch next quarter. (1) Q1-26 ATS growth print — must be >=15%; (2) Q1-26 gross margin — must expand YoY; (3) Q1-26 bookings — must grow QoQ; (4) any update on Agentic-solutions revenue disclosure. If any two of those four clear, the stock should reclaim $45. If three miss, expect a retest of the $34 April 2026 low.