1. At a Glance
Trading at just 0.37x book value and flaunting a 1.14% dividend, HGS looks cheap. But a ₹322 Cr FY25 loss and an ROE of -1.5% remind us — sometimes cheap things are just broken.
2. Introduction with Hook
Hinduja Global Solutions is like that once-popular soap opera — great legacy, confused present, and a plot twist called “other income”.
- FY25 Net Loss: ₹-322 Cr
- Book Value: ₹1,657 per share
- CMP: ₹614
So what gives? Is this the deepest value play in BPM? Or a digital transformation story with more hype than hope?
3. Business Model (WTF Do They Even Do?)
HGS operates two verticals:
1. BPM (Business Process Management)
- Voice/non-voice services
- Contact centers & back-office ops
- Clients across North America, UK, ME, Asia
2. Media & Digital
- Delivers cable, satellite, and broadband to 5Mn+ customers in India
- Acquisitions in Canada, UK, Philippines & AI-powered CX hubs
What they’re trying:
→ Combine BPO + AI + Digital CX = Cost-effective omnichannel solutions
What’s the challenge:
→ Making it profitable post-pandemic + post-divestment
4. Financials Overview
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | OPM (%) | EPS (₹) |
|---|---|---|---|---|
| FY21 | ₹2,602 | ₹336 | 3% | ₹80.39 |
| FY22 | ₹4,273 | ₹6,061* | 6% | ₹1,446 |
| FY23 | ₹4,505 | ₹334 | 6% | ₹63.22 |
| FY24 | ₹4,616 | ₹131 | 8% | ₹28.63 |
| FY25 | ₹4,404 | ₹101 (Adj), -₹322 (Reported) | 6% | ₹26.10 (Adj) |
*FY22 included mega gain from divestment of healthcare BPO biz
Core BPM margin = slim. Other income = sugar rush
5. Valuation
- CMP: ₹614
- Book Value: ₹1,657 → Trades at just 0.37x BV
- Dividend Yield: 1.14%
- P/E: NA due to FY25 loss
- Fair Value Range: ₹500 – ₹750
Based on:- Return to core profitability
- Stabilizing CX business
- Asset-rich balance sheet
But risk of prolonged margin compression keeps lid on re-rating.
6. What’s Cooking – News, Triggers, Drama
- New CEO & CFO (May 2025): Fresh blood to lead digital reboot
- AI CX hubs in Canada, UK, Manila: Global play, big bets
- Subsidiary mergers: Streamlining operations in US & Canada
- FY25 loss driven by higher depreciation, interest, and possible one-offs
- CRISIL downgrade (Mar 2025): Reflects near-term financial pressure
7. Balance Sheet
| Metric | FY25 |
|---|---|
| Equity Capital | ₹47 Cr |
| Reserves | ₹7,662 Cr |
| Borrowings | ₹1,943 Cr |
| Fixed Assets | ₹2,922 Cr |
| Investments | ₹3,643 Cr |
| Total Assets | ₹11,172 Cr |
Strong equity base, large investments → balance sheet is the moat
BUT: Leverage is rising post-acquisition spree
8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Flow (₹ Cr) |
|---|---|---|---|---|
| FY23 | ₹111 | ₹32 | -₹1,108 | -₹964 |
| FY24 | ₹192 | ₹178 | -₹808 | -₹438 |
| FY25 | ₹457 | ₹502 | -₹898 | ₹61 |
- Operations back to cash flow positive
- Investing aggressively in tech & subsidiaries
- Still bleeding via financing (interest, repayments, dividend outgo)
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 2.96% |
| ROE | -1.55% |
| OPM | 6% |
| Working Cap Days | 454 (!!) |
| Debtor Days | 63 |
| Interest Coverage | Low |
📉 High working capital + high interest = liquidity pressure
📈 But strong asset base = solvency cushion
10. P&L Breakdown – Show Me the Money
| Quarter | Revenue (₹ Cr) | OPM (%) | Other Income (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) |
|---|---|---|---|---|---|
| Q1 FY25 | ₹1,091.9 | 1.53% | ₹345.2 | ₹161.5 | ₹35.6 |
| Q2 FY25 | ₹1,087.1 | 3.17% | ₹120.4 | ₹-50.5 | ₹-9.7 |
| Q3 FY25 | ₹1,064.1 | 5.97% | ₹170.8 | ₹-8.6 | ₹-0.57 |
| Q4 FY25 | ₹1,161.0 | 12.27% | ₹136.7 | ₹-1.7 | ₹0.82 |
Volatile bottom line, despite improving margins.
Still dependent on non-core income to stay afloat.
11. Peer Comparison
| Company | CMP (₹) | ROE (%) | OPM (%) | Sales (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|---|---|---|
| eClerx | ₹3,716 | 23.8 | 24.0 | ₹3,365 | ₹541 | 33.7 |
| Firstsource | ₹353 | 15.0 | 15.5 | ₹7,980 | ₹586 | 42.6 |
| AllDigi Tech | ₹954 | 27.3 | 23.7 | ₹546 | ₹69 | 21.1 |
| HGS | ₹614 | -1.5 | 6.0 | ₹4,404 | ₹101 | NA |
→ HGS has the lowest margin + negative RoE
→ Yet among the strongest book value and dividend-paying
12. Miscellaneous – Shareholding, Promoters
| Category | Jun 2025 |
|---|---|
| Promoters | 67.99% |
| FIIs | 11.84% |
| DIIs | 0.01% |
| Public | 20.17% |
- Stable promoter holding
- Retail ownership up slightly
- DII presence virtually non-existent
13. EduInvesting Verdict™
HGS is the awkward in-between child of IT services and media.
One foot in BPM, another in broadband… and a third (somehow) in AI dreams.
Yes, the book value is massive.
Yes, the dividend is there.
But without a clear turnaround in margins or a strategic reshuffle, this is a value trap in disguise.
It’s not about “how cheap.” It’s about “how long until it works.”
And right now, it’s ticking slower than your landline dial tone.
Metadata
- Written by: EduInvesting Research Team | Date: 20 July 2025
- Tags: Hinduja Global Solutions, BPM, AI CX, Dividend Stocks, Value Trap, Hinduja Group
