Genpact looking for acquisitions – JP Morgan
SOURCE: Reuters
DATE: March 18th, 2009
Mohit Soapbox:
Genpact is in a good position to be an acquirer but has continued to suffer a below IPO stock price which has continued a small range of movement. Genpact was involved in looking to acquire Citi back office but backed off because of Citi management changes and valuation issues. Genpact has continued to say that they want to focus on business process outsourcing and not get into the IT space although they have tried to get into the IT packaged implementation space with minimal success.
I believe that Genpact will maybe make smaller acquisitions because it still faces challenges in integrating larger acquisitions and till the market for capital improves can really not leverage it’s stock for acquisitions.
Corrystone Global Partners is an outsourcing consulting firm providing benchmarking, operational risk compliance, operational audit and transition management services to companies with operations in US and India. We work with firms which are exploring India or low cost US locations for IT, Business Process work and or have established IT/operations in India and US and are looking at ways to further optimize cost and manage operational risk.
Genpact Ltd (G.N) is looking to pursue strategic acquisitions to fill gaps in its services and capabilities, J.P. Morgan Securities said, after attending the technology services provider’s analyst day.
“However, management did not seem in any hurry to aggressively pursue targets as it thinks valuation will get ‘more realistic’ over the next six months,” analyst Tien-tsin Huang said in a note to clients.
At a Reuters Summit last year, Genpact said it was looking to enter the Middle East and was bidding for business in the market.
The company is facing pricing pressures, but that may not have a big impact as it does not need to cut its prices significantly to lower costs for customers, Huang said.
Genpact said potential clients that have not historically shown interest in offshoring are exploring business process outsourcing with the company.
“However, the company continues to see delays in decision making resulting in sales cycles taking longer than usual,” Huang said.
The analyst, who has an “overweight” rating on the stock, said Genpact expects 2009 revenue to be driven primarily by existing clients.
Shares of Genpact, which have lost 36 percent of their value over the past year, closed at $7.98 Tuesday on the New York Stock Exchange. (Reporting by Mansi Dutta in Bangalore; Editing by Anne Pallivathuckal)
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