Genpact Q2 net up 57%

Genpact, the business process management and technology services company, reported its second quarter results with a net income at $61.1 million, up 56.6 per cent from the $39 mn in the corresponding quarter last year.

Revenue was $467.6 mn, up 17.6 per cent from $397.6 mn in the 2011-12 quarter. These were driven by growth in business from global clients (meaning, not from GE, its former parent). Business process management and technology services revenues from global clients were up 19.8 per cent and 38.4 per cent, respectively. Compared to the March, quarter, Genpact’s revenue was up 7.3 per cent and net income by 58 per cent, from $38.5 mn.

The company announced a special dividend of $2.24 per common share or approximately $500 mn. This is to be funded through a combination of balance sheet cash and incremental debt, expected to be raised from institutional lenders.

N V Tyagarajan, president and chief executive officer, said: “The management team regularly reviews our capital structure with the board of directors. We generate substantial operating and free cash flow, have approximately $442 mn of cash on our balance sheet and, taking into account the financial flexibility needed to continue to pursue acquisitions and organic growth initiatives, we concluded that a special dividend, funded in part by additional, modest leverage, would enhance shareholder value.”

The company said it expected revenue for the full year to be $1.86-1.90 billion, and adjusted operating income margins of 16-16.5 per cent. Revenues from global clients now represent 73 per cent of total revenue, with the remaining 27 per cent, or $126.2 mn, coming from GE. GE revenue increased 3.2 per cent.

Genpact also stated it was raising debt of around $925 mn from institutional investors.

“We are raising debt to avail of the attractive interest rates available in the market. We will use this to retire some of our debts on the book. We are still left with around $300 mn in cash , giving us ample room to pursue growth opportunities,” said Mohit Bhatia, chief financial officer, in an analyst call

The company had raised debt of $380 mn in May, of which $341 mn is due. With the new facilities, the company will retire this loan.

“Genpact had another great quarter, with strong growth in revenues, adjusted operating income, net income and EPS (earnings per share). Revenue growth was broad-based across all our geographies, including Europe, and all major service lines, including finance and accounting. We established 35 new client relationships this quarter across all major industry groups, up from 26 in the second quarter of 2011. Our results continue the momentum we have had since the beginning of 2011,” said Tyagarajan.