GENPACT LIMITED (G): what the price requires

Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/G

Headline

Field	Value
Ticker	G
Company	GENPACT LIMITED
Current price	$30.41/sh
Composition	Data-Tech-AI services 48% / Digital Operations services 52%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin needed	3.3%
Operating margin today	14.9%
Margin compression implied	-11.6pp
Multiple paid	8x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7.6% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range

Reference	Value
vs own history	-1.79σ
cohort percentile (of 172 peers)	2
implied end-window share	0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	0.85x	5	justifies
Earnings	0.92x	5	justifies
Relative	0.56x	5	justifies
Growth	0.58x	3	justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$124.47	0.24x	yes	FCF base $0.7B, growth 6% (input: historical growth), terminal g 4.0%, WACC 7.7%, 6yr projection
DCF Exit Multiple	Growth	$52.63	0.58x	yes	Exit EV/EBITDA: 6.7x / 8.7x / 10.7x (bear / base = today's held flat / bull), 6yr
Relative Valuation	Relative	$54.31	0.56x	yes	P/E 18x (static sector reference · 2026-04), scenarios: 15.0x / 18.0x / 21.0x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$35.63	0.85x	yes	BV/sh $14.32, ROE (TTM) 23.0%, ke 9.3%
Two-Stage Excess Return	Asset	$56.06	0.54x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$27.54	1.10x	yes	Rev $5.2B, growth 6% (input: historical growth; tapered), Terminal P/S: 0.8x / 1.0x / 1.2x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$39.12	0.78x	yes	EPS $3.26, growth 11% (input: historical EPS growth), PEG=0.83 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$32.65	0.93x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.66B × (1−24%) / WACC 7.7% → EPV (no growth)
Residual Income	Asset	$51.80	0.59x	yes	BV $14.32 + 5yr PV of (ROE (TTM) 23.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$32.41	0.94x	yes	√(22.5 × EPS $3.26 × BVPS $14.32) — Graham's conservative floor
EV/EBITDA Relative	Relative	$45.44	0.67x	yes	EBITDA $0.78B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$32.92	0.92x	yes	FCF $668.7M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	$27.18	1.12x	yes	SBC-adj FCF $0.58B (FCF $0.67B − SBC $0.09B) capitalized at Kₑ
Ben Graham Formula	Earnings	$83.89	0.36x	yes	EPS $3.26 × (8.5 + 2×11.1%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$7.03	4.33x	yes	BV $14.32 × (ROIC 3.8% / WACC 7.7%)
P/Sales Sector	Relative	$74.65	0.41x	yes	Revenue $5.16B × sector P/S 2.5x
PEG Fair Value	Relative	$54.29	0.56x	yes	EPS $3.26 × (PEG 1.5 × growth 11.1% (input: historical EPS growth)) → PE 16.7x
Earnings Yield	Earnings	$35.24	0.86x	yes	EPS $3.26 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net debt	$625.3m
Net debt / NOPAT (after-tax)	1.09x
Net debt / operating income (pre-tax)	0.83x
Share count CAGR (buyback)	-2.3%
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• At $28.25 Genpact trades below nearly every valuation method (blended landing near $48), with a 23% trailing ROE against a roughly 9% cost of equity and a high-single-digit forward P/E, the classic value-method mismatch.
• The inversion implies an operating margin near 3.6% versus the 14.8% the company runs today, so the price is pricing significant margin erosion, the central debate is whether that happens.
• The swing factor is AI: it powers the fast-growing Advanced Technology Solutions mix (24% growth, 27% of revenue) but also threatens the still-larger Digital Operations segment that grew just 4.1% in 2025.

Bull Case

Look at where the $28.25 price sits against the valuation methods and the picture is unusual for a profitable, growing services company: it lands below nearly all of them. The relative-valuation method lands near $48 on a blended P/E around 14x, the simple excess-return model near $36 off a $14.32 book value with a trailing ROE of 23%, the two-stage excess-return near $56, residual income near $52, and the perpetual-growth DCF as high as $128 on mid-single-digit free-cash-flow growth. The blended landing across applicable methods sits near $48, well above the price. When asset-based, earnings-power, relative, and growth frames all cluster above the market, the engine reads it as a value, asset-supported name rather than a growth bet, and the market is paying about 0.6x what the methods say.

The business behind that gap is improving, not declining. Genpact runs two segments the 10-K classifies as Data-Tech-AI and Digital Operations based on the nature of the solutions and services (FY2025 10-K, accession 0001398659-26-000004). For 2025, net revenues grew 6.6% to $5.08 billion, with Data-Tech-AI up 9.3% to $2.44 billion and adjusted EPS up 11% to $3.65. In Q1 2026 the higher-value Advanced Technology Solutions revenue accelerated to 24% growth and now makes up 27% of the mix, the part of the business that carries the best margins and the most AI exposure.

The economics are strong and the capital allocation is shareholder-friendly. A trailing ROE of 23% against a cost of equity near 9% means the business earns well above its hurdle, free cash flow near $670 million comfortably covers the modest dividend, and the share count has shrunk at roughly 2% a year. Net debt under 1x operating income leaves ample room. A Google Cloud AI alliance and the pivot to data, AI, and agentic solutions reframe the story from low-cost outsourcing toward higher-value technology work. For a company compounding earnings in the high single digits with a 23% return on equity, a high-single-digit forward P/E is the kind of mismatch the value methods are built to flag.

Bear Case

The competitive threat to Genpact is the same technology it is selling, and the disruptors are formidable. Generative AI and agentic automation are compressing exactly the labor-arbitrage work that built the business: the digital-operations segment, still 52% of revenue, runs on people executing finance, procurement, and back-office processes that AI agents are increasingly able to do directly. The largest IT-services and consulting firms, Accenture, TCS, Infosys, Cognizant, and the hyperscalers' own services arms, are racing to automate those workflows, and the software vendors building agents (including the cloud platforms Genpact now partners with) can disintermediate the integrator entirely. The 10-K itself flags lower-value IT support services for legacy applications and end-user computing as part of the portfolio (FY2025 10-K, accession 0001398659-26-000004), the kind of work most exposed to automation.

That is why the cheap multiple may be a fair price rather than a bargain. The market is implicitly forecasting that revenue growth slows and that AI deflates the price of the services Genpact sells faster than the company can move clients up the value chain. The reverse model captures the skepticism: at $28 the implied operating margin is only about 3.6%, far below the 14.8% the company runs today, which says the market is pricing meaningful margin erosion, not stability. Digital Operations grew only 4.1% in 2025, the slow half of the business, and if AI accelerates client insourcing, that segment could shrink.

The currency and concentration risks compound the threat. A large share of delivery sits in India and other emerging markets, exposing margins to wage inflation and FX swings, and the client base is concentrated among large enterprises that can in-source or renegotiate. Genpact has a credible AI pivot, but the bear case is that it is defending against a wave that lowers the value of its core service faster than the Advanced Technology Solutions mix can grow to replace it. A low multiple on shrinking-value revenue is not the same as a low multiple on durable earnings.

Valuation

In plain terms, the price is consistent with the market expecting margins to fall by more than half, which is why the engine characterizes the stock as supported across asset-based, earnings-power, relative, and growth value, a value name rather than a growth bet.

The model X-ray reinforces the gap. The relative-valuation method lands near $48 on a blended P/E around 14x (sector 18x against a trailing 9x), the simple excess-return model near $36 and the two-stage near $56 off a $14.32 book value with 23% trailing ROE, residual income near $52, earnings-power value near $33, FCF yield near $33, and the perpetual-growth DCF as high as $128. The blended landing across applicable methods is near $48. Only the two-stage dividend model and the SBC-adjusted FCF yield land near or below the price; the broad weight of methods sits well above it.

The spread is the information. Genpact earns a 23% return on equity against a roughly 9% cost of equity and trades at a high-single-digit forward P/E, a combination the value methods read as cheap. The peer set, HURN, FCN, BAH, IT, and VVX, is consulting and IT-services, where mid-teens multiples are normal, so Genpact sits at a discount to its own cohort. The bet on the long side is that the AI pivot defends and extends the franchise; the bear read is that the discount is the market correctly pricing AI deflation of the core service. Net debt under 1x operating income means the balance sheet is not the constraint, the durability of services demand is.

Catalysts

Genpact reported Q1 2026 on May 7, with revenue of $1.30 billion and net income near $148 million, and Advanced Technology Solutions revenue growth accelerating to 24% year over year, now 27% of total revenue. Full-year 2025 results, reported February 5, showed net revenue up 6.6% to $5.08 billion and adjusted EPS up 11% to $3.65. For 2026 the company guides to at least 7% as-reported growth, Advanced Technology Solutions growth of at least 20%, and gross margin expanding about 50 basis points to 36.5%. Q2 2026 guidance is revenue of $1.324 billion to $1.336 billion and adjusted EPS of $0.96 to $0.97.

The key forward catalyst is the AI pivot and the partnerships behind it, including a Google Cloud AI alliance highlighted on the Q1 call. The data point that matters most is the mix shift: the faster Advanced Technology Solutions grows as a share of revenue, the more the story moves from labor arbitrage toward higher-value technology work, which is what would close the gap to the valuation methods. The offsetting watch item is the Digital Operations trajectory, the slower-growing half most exposed to AI automation. Continued buybacks and the dividend are the steady levers on per-share results.

Sources: Genpact Q1 2026 and FY2025 results (media.genpact.com, Motley Fool, Yahoo Finance, TipRanks, 2026); FY2025 10-K (accession 0001398659-26-000004).

Peer Cohorts (Per Segment, With Filing Citations)

Financial Services (reported)

• ACN (Accenture plc)
• (no filing in the citation store)
• CTSH (COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION)
• (no filing in the citation store)
• DXC (DXC Technology Co)
• (no filing in the citation store)
• EPAM (EPAM SYSTEMS, INC.)
• (no filing in the citation store)
• IT (Gartner, Inc.)
• (no filing in the citation store)
• INFY (INFY)
• (no filing in the citation store)

Consumer and Healthcare / High Tech and Manufacturing (reported)

• HURN (HURON CONSULTING GROUP INC.)
• (no filing in the citation store)
• FCN (FTI CONSULTING, INC)
• (no filing in the citation store)
• BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
• (no filing in the citation store)
• IT (Gartner, Inc.)
• (no filing in the citation store)
• PAYX (Paychex, Inc.)
• (no filing in the citation store)
• ACM (AECOM)
• (no filing in the citation store)
• TTEK (TETRA TECH, INC.)
• (no filing in the citation store)
• VVX (V2X, Inc.)
• (no filing in the citation store)

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.