Capgemini reported mixed full-year results. While the top line beat our forecasts, earnings per share fell slightly short from our expectations. Nonetheless, with a promising book to bill of 1.16 showcasing healthy demand, we think Capgemini’s fiscal 2023 will be more solid than the outlook even with possible currency headwinds. We continue to believe that Capgemini, as well as other top IT services firms, will benefit from margin expansion over the next five years as IT services mix skews toward higher value add areas. However, we reiterate our no-moat rating for Capgemini, an anomaly among our otherwise moaty IT services coverage, as we have little confidence in the company’s ability to sustain excess returns on invested capital in the long term. As a reminder, Indian IT consultancies, such as TCS and Infosys, have been increasing their mix toward Europe over the past several years, which has further led to pressures on Capgemini. Yet, we believe that the market is baking in Capgemini’s puts and takes properly, as the stock has further approached our fair value estimate over the last month. We are maintaining our EUR 190 fair value estimate for the no-moat company, which places Capgemini in fairly valued territory.