Alten Using Mid-Sized Acquisitions to Counterbalance the Pandemic Impact Alten had told investors it would increase
Capgemini Betting on Altran To Reach its New 2025 Financial Objectives
Capgemini unveiled its new financial objectives for the 2020-2025 period, of which Altran will play a significant part. The company now targets a 7 to 9% annual revenue growth at cc and an adjusted EBIT margin of 14% by 2025. Capgemini will reach revenues in the range of EUR 22.2-24.4bn by 2025 (from an estimated pro-forma EUR 16.3bn in 2020) and EUR 3.1-3.4bn in adjusted EBIT (from EUR 1.5bn in 2020).
Hitachi Buys GlobalLogic for USD 9.6bn. A Shock to the ER&D industry
The Hitachi USD 9.6bn acquisition of GlobalLogic was a shock to the engineering and R&D service industry. Hitachi values GlobalLogic 37.4x its calendar 2021 adjusted EBITDA. The multiple is very high, even for a firm of the quality of GlobalLogic. Only three years ago, Apax sold its 48% stake in GlobalLogic to Switzerland-based Partners Group. At the time, the transaction valued GlobalLogic USD 2bn. Back then, the USD 2bn valuation seemed in line with the Aricent and Luxoft respective acquisitions by Altran and DXC.
Nuclear Engineering Remains Promising for Assystem
Nuclear engineering remains promising for Assystem. Revenues of nuclear engineering proved slightly more resilient during 2020 (with a 4.2% revenue decline at cc/cs) than the company itself (-5.3%). In H1 2020, the activity was impacted by the lockdown in Europe, as nuclear engineering requires a higher level of onsite work than ER&D services. Revenues bounced back in H2, reaching a slight organic growth.
Akka Shifts its US Strategy and Goes India-Centric
Akka Technologies made a significant shift in its US strategy with the appointment of Dharam Sheoran. Mr. Sheroan joined from Wipro and must have been an ideal candidate for Akka. At Wipro, he headed several global service lines, including automotive and A&D. His experience, therefore, matches Akka’s presence and ambitions in the country.
Assystem Betting on Long-Term with Acquisition in India
Assystem is betting on the long-term with its 99% acquisition of an Indian engineering firm, STUP Consultants. STUP is headquartered in Mumbai, had revenues of approximately EUR 20m and a headcount of 1.1k. It provides transport infrastructure engineering services, mostly around highways, railways, metros, and airports. The company is also present in water treatment and energy engineering.
More Tuck-In M&As Despite the Pandemic! Belcan, AFRY, and Semcon
Tuck-in M&As continued despite the pandemic and the pending US elections today, with Belcan, AFRY, and Semcon active in the past week.
Cyient Gradually Back to Expansion
Cyient Suffering from its Vertical Mix From the numbers, it may not show. But Cyient is
Wipro Acquires A Semiconductor Engineering Specialist
Wipro joined many competitors in acquiring a semiconductor engineering specialist. ER&D service vendors are rushing into this market, attracted by its long-term growth potential. Indeed, we estimate to ten the number of semi-conductor M&As since 2015. Altran, through the Aricent, GlobalEdge, and SciConTech transactions, has been the most acquisitive. However, all the industry’s brand names have been active, e.g., Tech Mahindra, HCL Tech, Alten, LTTS, and Cyient.
Infosys Gains Product Design & Engineering Capabilities with Kaleidoscope
Infosys made a rare acquisition in the world of ER&D with Kaleidoscope Innovation. Kaleidoscope is headquartered in Cincinnati, OH, has a headcount of 60 and revenues of USD 21m in calendar 2019. Infosys is paying USD 42m.
Cyient Acquires An Onshore Mining Consulting Unit in Australia
Cyient is to acquire Melbourne-based Integrated Global Partners (IG Partners) for AUD 12m in cash (USD 9m) + earn-outs. IG Partners is a mining business and organizational consulting firm. The company has a specialty in enterprise asset management. It had in FY20 revenues of AUD 15m (USD 11m) and a headcount of 40.
Expleo’s New CEO: A Perfect Resume and Daunting Challenges
We just learned that Expleo has a new CEO, Rajesh Krishnamurthy. On paper, Mr. Krishnamurthy, has everything right for Expleo. He is a French citizen of Indian origin. He has held senior roles at Infosys, including one as head of the Energy, Utilities, and Telco division, a major responsibility as Infosys is organized by vertical. He also led Infosys Global Consulting.
COVID-19: Cyient Warns of 15-20% Decline in Revenues in Q1 FY21
Cyient surprised, negatively, the markets by announcing a decline of 9.7% in its Q4 FY20 revenues (to USD 149m) and an adjusted EBIT margin down 440 bps (to 8.4%).
Capgemini Finally Becomes the Number Engineering and R&D Sevices Vendor
The Stock Market meltdown resulted in an unexpected outcome: Capgemini secured 98.2% of the shares of Altran, with investors rushing to get EUR 14.5 per Altran share. Capgemini will now launch a squeeze-out procedure.
The Head of Tech Mahindra IES Becomes COO at Cyient
Karthik Natarajan, the former head of Tech Mahindra’s Integrated Engineering Services (IES), has joined Cyient as COO. We think, the appointment of Mr. Natarajan is a welcome move for Cyient, which has faced growth challenges in the past quarters, resulting from its client concentration and its exposure to Boeing and Pratt & Whitney.
Altran’s Plans for Raising its Margins
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Tech Mahindra To Acquire a Semiconductor Engineering Firm
Tech Mahindra made a surprise move in semiconductor engineering services. The company is to acquire Cerium
LTTS Unexpectedly Slows Down in Q3 FY20
LLTS’ revenue growth in Q3 FY20 decelerated from 11.9% at CC in Q2 to +7.5% in Q3. The company was hit by a deteriorating situation in its Telecom & High-Tech (-26%), which was impacted by the ramp-down of two clients in its Semiconductor sub-vertical that represents (we estimate) 40% of its Telecom & High-Tech sector. LTTS, also, had flat growth (+2%) in its Industrial Products, with large accounts reducing their spend.
Wipro Still Reinventing its Industrial and Engineering Business in Q3 FY20
Wipro announced a mild growth in the revenues of its Industrial and Engineering (I&E) business unit in Q3 FY20: I&E revenues were up by 3.1% only (to USD 151m). Revenues included a small contribution from the recent ITI acquisition and were impacted by the market conditions in the semiconductor industry and softness in 5G adoption.
KPIT Had A Solid Q2. Strategic Questions Remain
Automotive engineering pure-play KPIT continued on its growth momentum in Q2 FY20 (+15.2% yoy), enjoying a satisfactory EBITDA margin of 13.4%. KPIT’s financial performance was, however, a notch below that of Q1 both in terms of revenue growth (Q1: +19.3%) and margin (14.6%).
Thoughts About HCL Tech’s Performance in Q2 FY20
HCL Tech’s ERS accelerated its yoy growth in Q2 FY20 to +15.0% at CC, from +13.3%. Its EBIT margin also increased from 16.0% in Q1 to 21.4% in Q2. The financial improvement results from mostly a catch-up effect: ERS recognized revenues in Q2 that it could not in Q1.
Wipro Expecting An Acceleration in E&IS from Q3 Onward
During its Q2 FY20 earnings call, Wipro provided some light about the performance of its Industrial & Engineering Services (E&IS) unit.
It is not so long ago that Wipro was corporate India’s strongest name for ER&D services, mostly servicing clients in the network equipment provider industry and also semiconductor manufacturers.
HCL Tech’s Financials Are No Longer A Mystery! Major implications…
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TCS acquires parts of GM’s Technical Center in Bengalore
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HCL Tech’s Q1 FY20 earnings are a mystery
You may have noticed we had not reported HCL Tech’s Q1 FY20 earnings. HCL has changed the way its reports its segments.