Upcycle building behind the curtain, INITIATE with BUY

Quality is the bedrock. GFT is a banking specialist in one of the hardest IT verticals, where security, regulation and legacy stacks make execution risk the real cost. Long-standing tier-1 client relationships support repeat business, while consistently high workforce utilisation signals disciplined delivery and cost control. A broad hyperscaler and ISV partner ecosystem keeps GFT close to product roadmaps and client decisions. GFT is also embedding AI into delivery, supporting faster delivery and higher client ROI. This is reflected in a 14.3% average ROCE (2022-27e, eNuW).

Growth is the upside. AI increases project volume, as it shifts the bottleneck to data flows, APIs and core platforms. That is exactly where GFT sits, with platform modernisation and cloud migration at the centre of its mix. There are real-world examples where AI-driven efficiency has expanded, not reduced, project scope. At several clients, GFT is now working with larger teams as additional projects clear the ROI hurdle.

Two tangible levers add uplift: scaling smartshore delivery towards 40% by 2029 (from c. 20% today) mostly via the India hub, and a mix shift into high value-added services (c. 25% today, with up to 50% targeted by 2029), supported by bolt-on M&A.

2025 is still masked by clean-up: Q4 should look similar to Q3 with only marginal reported growth, despite improving fx-adjusted trends. Excluding UK and Software Solutions, the core group is already running c.11% fx-adj. growth with c. 9% adj. EBIT margin in 2025e (eNuW). The UK reset and Software Solutions resizing should ease the drag into 2026.

Valuation still prices in the noise. GFT trades at a 10% FCFY by 2027e (eNuW), supported by its capital light setup. As the clean-up in UK completes and market momentum feeds through reported figures, we see scope for a re-rating alongside recovering margins. Starting from a low-base in 2025e, the forecasted EPS CAGR into 2028e is at 26%.

BUY, PT € 32, based on DCF.