Is G a good stock to buy? We came across a bullish thesis on Genpact Limited on r/ValueInvesting by Senior_Tadpole_3913. In this article, we will summarize the bulls’ thesis on G. Genpact Limited’s share was trading at $28.28 as of June 23rd. G’s trailing and forward P/E were 8.62 and 18.32 respectively according to Yahoo Finance.
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Genpact Limited provides business process outsourcing and information technology services in India and internationally. G is presented as an overlooked value opportunity despite delivering solid operational performance and maintaining a strong financial profile. The company generated $5.08 billion in revenue during FY2025, representing 6.6% year-over-year growth, while diluted EPS increased 9.8% to $3.13 and adjusted EPS rose 11.3% to $3.65.
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Profitability remains attractive, with an estimated return on invested capital of 13.7% compared to a weighted average cost of capital of roughly 6.6%, demonstrating meaningful value creation. The balance sheet has improved significantly over the past several years, with debt-to-equity declining to 0.23 from 1.05 in 2021 and a healthy current ratio of 1.66 supporting financial flexibility.
The business also generates substantial cash flow, producing approximately $566 million in free cash flow, which values the company at only about 10.3x free cash flow. Additional signs of operational strength include gross margin expansion, a fourth-quarter earnings and revenue beat, and a 10% dividend increase that brings the yield to roughly 2.2%.
The core investment thesis centers on a disconnect between Genpact’s market valuation and its evolving business model. At approximately $34 per share, the stock trades near 11x trailing earnings, well below its historical average multiple of 18-19x. Valuation frameworks including the Graham Formula and discounted cash flow analysis suggest intrinsic value ranging from $40 to $65 per share, implying potential upside of roughly 30% to more than 90% from current levels.
While the market continues to classify Genpact as a traditional business process outsourcing company vulnerable to artificial intelligence disruption, the company is increasingly positioning itself as an AI-enabled transformation partner. Advanced Technology Solutions revenue grew 17% year over year and now accounts for 24% of total revenue, supported by a record $5.5 billion bookings backlog and more than 400 deployed generative AI solutions.
As Genpact shifts from labor-based contracts toward outcome-based engagements with potentially higher margins, the company appears positioned to benefit from AI adoption rather than be displaced by it, creating a compelling risk-reward profile if the market eventually recognizes this transformation.
Previously, we covered a bullish thesis on Accenture plc (ACN) by Sanjiv in December 2024, which highlighted the company’s leadership in consulting and managed services, strong cloud and GenAI momentum, and consistent growth supported by acquisitions and operational efficiency. ACN’s stock price has depreciated by approximately 64.34% since our coverage. Senior_Tadpole_3913 shares a similar view but emphasizes on Genpact’s undervaluation, AI-driven transformation, and significant upside potential from multiple expansion and improving margins.
Genpact Limited is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held G at the end of the first quarter which was 36 in the previous quarter. While we acknowledge the risk and potential of G as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than G and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
