The senior management at India’s largest business process outsourcing (BPO) company, Genpact —including President and CEO Pramod Bhasin and COO N V Tyagarajan — has been selling shares of the company in recent months.
Genpact is listed on the New York Stock Exchange (NYSE). “Some senior people have been selling some of their shares primarily for liquidity after a long period, when overall prices were depressed. There is nothing significant about this. It happens in every company,” said Bhasin.
The activity comes on the back of rumours that investors and private equity partners like General Atlantic, Oak Hill and GE are looking to exit their stake and that information technology company Cognizant has emerged as a possible front-runner for picking up a majority stake in Genpact. Bhasin had earlier rubbished the rumours as “baseless and untrue”.
“Genpact is doing very well in the stock markets at revenue multiples of above 3x, unlike its BPO peers. Its stock is at a 52-week high of $15. So, it is not unusual for their senior management to encash on their holdings. Most other BPOs have been trading at much lower multiples since the last downturn in the market. Stock markets have shown significant confidence in Genpact,” said Avinash Vashistha, chairman and CEO at advisory company Tholons.
“It is a good time to sell stocks as the market is at a high,” corroborated Alok Shende, principal analyst and founder-director of consulting agency Ascentius.
Analysts said the top management was selling its shares because the risk of a downside was significant. “Given the competition, it is possible that Genpact is discounting deals to win contracts. It might be difficult to sustain margins and grow simultaneously. This is also reflected by the fact that, despite the stock having reached a 52-week high, senior managers are not confident enough of sustaining growth,” said an analyst who tracked the BPO.
For the third quarter ended September 30, Genpact posted a 1.6 per cent fall in its net income to $33 million (Rs 155.3 crore), compared with $33.6 million (Rs 157.9 crore) in the corresponding quarter a year earlier. Total net revenue was $284.4 million (Rs 1,336.6 crore), up 5 per cent year-on-year from $270.8 million (Rs 1,272.7 crore).