Capgemini Technology Ltd Unlisted Shares

Are you looking to invest in a world-class IT services company with a massive presence in India? Capgemini Technology Services India Limited (CTSIL) is the Indian arm of the global IT giant Capgemini Group. With revenues exceeding ₹11,000 crore, a pan-India delivery footprint, and a strong track record of financial performance, Capgemini India offers a rare opportunity to own a piece of a global technology leader in the unlisted space.

Delisted from Indian stock exchanges in 2008, the company’s unlisted shares provide access to a stable, high-growth business with over 13,000 shareholders and a client base that includes the world’s leading corporations.

Company Overview: The Indian Arm of a Global IT Leader

• Incorporated: Under the Indian Companies Act, 1956.

• Registered Office: Hinjawadi Phase-III, MIDC-SEZ, Pune.

• Parent Group: Capgemini SE, one of the world’s foremost leaders in consulting, technology services, and digital transformation.

• Core Business: Provides customized and packaged application development, application maintenance outsourcing, business intelligence services, and application re-engineering.

Pan-India Delivery Network

Capgemini India leverages large-scale offshore development centers located in the country’s top tech hubs:

• Bengaluru

• Chennai

• Pune

• Mumbai

• Hyderabad

These centers serve global clients, offering cost-effective, high-quality IT solutions and driving significant revenue for the parent group.

Key Corporate Actions

• Delisting: The company was delisted from Indian Stock Exchanges in 2008 , making its shares available primarily in the unlisted market.

• Acquisitions (FY20-21): Capgemini India expanded its capabilities through strategic acquisitions:

  • Solcen Technologies Private Limited: 100% stake acquired.

  • Aricent Technologies (Holdings) Limited: 98.25% stake acquired.

These acquisitions strengthened the company’s engineering and R&D capabilities.

Financial Performance: Consistent Growth & Strong Cash Flow

FY20-21 Performance

• Revenue Growth: 15% increase over the previous year.

• EBITDA: ₹3,543 Cr (up from ₹3,184 Cr).

• Profit After Tax (PAT): ₹1,690 Cr (flat vs. previous year).

• Key Observation: Employee benefit expenses jumped by 25% (from ~₹10,000 Cr to ~₹12,500 Cr), indicating the company was investing heavily in talent to prepare for massive growth opportunities in the coming years.

FY22-23 Performance (Strong All-Round Growth)

Analysis:

• Strong Top-Line Growth: 23.4% revenue growth demonstrates robust demand for Capgemini’s services.

• Healthy Profit Growth: PAT grew 19%, with EPS increasing even faster at 27.7% (possibly due to share buybacks or other factors).

• Exceptional Cash Generation: Cash flow from operations more than doubled to ₹3,318 Cr , a phenomenal 74.5% increase. This is a hallmark of a high-quality business.

Valuation: How Does Capgemini India Compare to Listed Peers?

• Current Unlisted Share Price (as of Sep 2023): ~₹12,000 per share

• EPS (FY23): ₹535

• Price-to-Earnings (P/E) Ratio: ~22.4x

Comparison with Listed IT Giants:

Analyst View: At a P/E of 22x, Capgemini India is reasonably valued compared to its Indian listed peers. It trades at a discount to TCS (30x) and Infosys (25x) but at a slight premium to Wipro (20x). Given its strong cash flow, parentage, and growth, the valuation appears attractive.

Key Investment Highlights

1. Global Parentage: Part of the Capgemini Group, a world leader in consulting and technology services.

2. Strong Financials: Consistent double-digit revenue growth (23.4% in FY23) and healthy profit margins.

3. Exceptional Cash Flow: Cash from operations surged 74.5% to ₹3,318 Cr in FY23, indicating superb business quality.

4. Pan-India Delivery: Large-scale development centers in India’s top tech cities provide scalability and cost advantage.

5. Strategic Acquisitions: Acquisitions of Aricent and Solcen Technologies have strengthened engineering and R&D capabilities.

6. Stable Shareholder Base: Over 13,000 shareholders, with the stock being held since its delisting in 2008.

7. Reasonable Valuation: P/E of 22x is attractive compared to listed peers like TCS (30x) and Infosys (25x).

8. Sector Tailwinds: Benefiting from global digital transformation spends and the trend of outsourcing to India.

Risks to Consider

1. Majority Ownership: As a subsidiary of a global parent, minority shareholder influence is limited.

2. Currency Risk: A significant portion of revenue is in foreign currencies (USD, EUR), exposing the company to forex fluctuations.

3. Competition: Faces intense competition from other Indian IT giants (TCS, Infosys, Wipro, HCL) and global players (Accenture, IBM).

4. Employee Cost Pressure: The IT services industry is talent-intensive, and rising employee costs (25% jump in FY21) can impact margins.

5. Global Economic Slowdown: Demand for IT services is linked to global economic conditions; a recession in the US or Europe could impact growth.

6. Unlisted Liquidity: As an unlisted company, shares are not traded on stock exchanges, and liquidity may be limited.

The Opportunity: Own a Stake in a Global IT Leader’s Indian Arm

Capgemini Technology Services India offers a unique opportunity to invest in a company that combines the stability of a global parent with the growth dynamics of the Indian IT services ecosystem. With strong financials, exceptional cash generation, and a reasonable valuation, it is a compelling addition to a diversified unlisted portfolio.

Ready to Add a Global IT Powerhouse to Your Portfolio?

Buy Unlisted Shares of Capgemini Technology Services India Ltd exclusively through Unlisted Network.

Invest in the Indian arm of a world leader in technology services.