Genpact Limited reports 8.6% EBITDA growth in 2020 and 0.56 pp EBITDA Margin growth from 18.0% to 18.5%
02/09/2021 • About Genpact Limited (
$G) • By InTwits
Genpact Limited reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Genpact Limited has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $57m in FY2020, $69m in FY2019, $68m in FY2018, $44m in FY2017, $26m in FY2016
- The company has highly profitable business model: ROIC is 12.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.9x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Genpact Limited's Revenue increased on 5.4%. Revenue growth showed slowdown in 20Q4 - it was 1.0% YoY. During 2016-2020 Revenue growth topped in 2019 at 17.3%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.8 pp from 19.0% to 20.8% in FY2020. During the last 5 years EBITDA Margin bottomed in 2018 at 15.1% and was growing since that time.
Gross Margin showed almost no change in 2020. Gross Margin followed a declining trend at -1.3 pp per annum in 2016-2020. SG&A as a % of Revenue decreased slightly on 1.3 pp from 22.6% to 21.3% in 2020. SG&A as a % of Revenue stuck to a declining trend at -1.1 pp per annum in the last 5 years.
Net Income margin showed almost no change in 2020. Net Income margin followed a declining trend at -0.53 pp per annum in 2016-2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.9% in 2020. CAPEX/Revenue showed almost no change from 2017 to 2020. Average CAPEX/Revenue for the last three years was 2.3%.
Return on investment
The company operates at good ROIC (12.7%) and ROE (17.5%). ROIC decreased slightly on 1.9 pp from 14.6% to 12.7% in 2020. ROE decreased on 2.2 pp from 19.7% to 17.5% in 2020.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 2.2x to 1.9x in 2020. Debt increased on 8.3% while cash jumped on 45.7%. During 2016-2020 Net Debt/EBITDA topped in 2019 at 2.2x.
Genpact Limited has no short term refinancing risk: cash is higher than short term debt (190.0%).
Valuation and dividends
Genpact Limited's trades at EV/EBITDA 13.2x and P/E 25.2x.
Management team
N V Tyagarajan "Tiger" is a the company's CEO. N V Tyagarajan "Tiger" has spent 9 years with the company. Edward J Fitzpatrick "Ed" is a the company's CFO. Edward J Fitzpatrick "Ed" has spent 6 years at the company.
Financial and operational results
FY ended 12/31/2020
Genpact Limited ($G) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,571 | 2,737 | 3,001 | 3,521 | 3,709 | 5.4% |
| Gross Profit | 1,016 | 1,055 | 1,079 | 1,226 | 1,291 | 5.3% |
| SG&A | 653 | 689 | 694 | 795 | 790 | -0.6% |
| EBITDA | 423 | 426 | 452 | 633 | 687 | 8.6% |
| EBIT | 341 | 331 | 348 | | | |
| Interest expence | 23 | 40 | 49 | | | |
| Tax | 62 | 60 | 81 | | | |
| Net Income | 270 | 263 | 282 | 305 | 308 | 1.1% |
| Stock Based Compensation | 25 | 36 | 49 | | | |
Balance Sheet
|
|---|
| Cash | 423 | 504 | 368 | 467 | 680 | 45.7% |
| Accounts Receivable | 615 | 693 | 774 | | | |
| Accounts Payable | 10 | 15 | 43 | | | |
| Short Term Debt | 199 | 209 | 328 | 171 | 358 | 109.5% |
| Long Term Debt | 698 | 1,007 | 976 | 1,663 | 1,628 | -2.1% |
Cash flow
|
|---|
| Capex | 82 | 57 | 85 | 75 | 70 | -6.3% |
| Dividends | | 47 | 57 | | | |
| Acquisitions | 45 | 285 | 112 | | | |
Ratios
|
|---|
| Revenue growth | 4.5% | 6.5% | 9.6% | 17.3% | 5.4% | |
| EBITDA growth | 1.4% | 0.8% | 6.0% | 40.0% | 8.6% | |
|
|---|
| Gross Margin | 39.5% | 38.6% | 36.0% | 34.8% | 34.8% | -0.0% |
| EBITDA Margin | 16.5% | 15.6% | 15.1% | 18.0% | 18.5% | 0.6% |
| EBIT Margin | 13.3% | 12.1% | 11.6% | | |
| SG&A, % of revenue | 25.4% | 25.2% | 23.1% | 22.6% | 21.3% | -1.3% |
| SBC, % of revenue | 1.0% | 1.3% | 1.6% | | |
| Net Income Margin | 10.5% | 9.6% | 9.4% | 8.7% | 8.3% | -0.3% |
| CAPEX, % of revenue | 3.2% | 2.1% | 2.8% | 2.1% | 1.9% | -0.2% |
|
|---|
| ROIC | 16.2% | 13.8% | 13.1% | 14.6% | 12.7% | -1.9% |
| ROE | 20.8% | 19.4% | 19.9% | 19.7% | 17.5% | -2.2% |
| Net Debt/EBITDA | 1.1x | 1.7x | 2.1x | 2.2x | 1.9x | -0.3x |
| Interest expence / Average debt | 2.6% | 3.8% | 3.8% | | | |
People
|
|---|
| Insider ownership | 1.0% | 1.0% | 1.0% | | | |
| Employees | 75,000 | 78,000 | 87,000 | | | |
| Revenue/Employee, th. $ | 34 | 35 | 34 | | | |
Genpact Limited ($G) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 923 | 900 | 936 | 951 | | 14.1% | 2.1% | 5.3% | 1.0% |
| EBITDA | 150 | 131 | 165 | 153 | | 11.4% | -16.2% | 0.9% | -14.2% |
| Net Income | 86 | 62 | 85 | 75 | | 40.9% | -15.7% | -3.0% | -8.8% |
Balance Sheet
|
|---|
| Cash | 402 | 867 | 803 | 680 | | 23.4% | 129.4% | 75.8% | 45.7% |
| Short Term Debt | 271 | 604 | 360 | 358 | | -32.7% | 59.3% | 6.5% | 109.5% |
| Long Term Debt | 1,668 | 1,677 | 1,652 | 1,628 | | 34.2% | 32.5% | 32.1% | -2.1% |
Ratios
|
|---|
| Gross Margin | 34.5% | 34.0% | 35.2% | 35.4% | | -1.4% | -1.2% | -0.2% | 2.5% |
| EBITDA Margin | 16.2% | 14.5% | 17.6% | 16.1% | | -0.4% | -3.2% | -0.8% | -2.9% |
| Net Income Margin | 9.3% | 6.9% | 9.1% | 7.9% | | 1.8% | -1.5% | -0.8% | -0.8% |
Peers in Data Processing & Outsourced Services
Below we provide Genpact Limited benchmarking against other companies in Data Processing & Outsourced Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 11.8% | 7.4% | 8.9% | -3.3% |
|---|
| Genpact Limited ($G) | - | 6.5% | 9.6% | 17.3% | 5.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.2% | 39.5% | 41.0% | 41.7% | 36.7% |
|---|
| Genpact Limited ($G) | 39.5% | 38.6% | 36.0% | 34.8% | 34.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.4% | 22.2% | 18.7% |
|---|
| Genpact Limited ($G) | 16.5% | 15.6% | 15.1% | 18.0% | 18.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.3% | 3.1% |
|---|
| Genpact Limited ($G) | 3.2% | 2.1% | 2.8% | 2.1% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.1% | 10.6% | 10.2% | 8.2% | 5.5% |
|---|
| Genpact Limited ($G) | 16.2% | 13.8% | 13.1% | 14.6% | 12.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| Genpact Limited ($G) | 1.1x | 1.7x | 2.1x | 2.2x | 1.9x |
