Capgemini: Q1 15 and iGate acquisition conference call feedback: the deal you couldn’t missBUY, Fair Value EUR89 vs. EUR84 (+5%)
We reiterate our Buy rating and raise our DCF-derived fair value to EUR89 from EUR84 following the conference calls held yesterday, on higher medium-term op. margin assumptions (12% vs. 11%) – excluding iGate. We estimate iGate will provide additional upside given Capgemini’s adj. EPS accretion guidance of 12% for 2016 and 16% for 2017 and USD75-105m efficiency gains and USD100-150m sales synergies by 2018. In addition, net debt is projected to be neutralised by end 2017.
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