* Reported inline revenue as it grew 3.9% QoQ to $190mn (up 2.8% QoQ in INR terms). In CC terms, the revenue growth was 3.8% QoQ. The sequential revenue growth was led by strong growth in Transportation and Plant Engineering segments
* Revenues from digital and high‐end technologies continues to grow at robust pace and stood at 52% during the quarter.
* EBIT margin grew by 138bps QoQ to 16.6%, led by better business mix. Offshore revenue mix increased by 80bps QoQ in the quarter.
* Deal win momentum remained strong for the company as it won 6 deals with TCV of $10mn +.
* Employee utilization was up 140 bps QoQ to 78.9%.
* LTM attrition picked up by 150 bps QoQ to 12.2%, led by higher demand for talent.
* Board has recommended final dividend of Rs 14.5/share. (Total dividend payout is 35% for FY21)
Our view: The company has continued to deliver strong sequential revenue and margin performance over last 3 quarters. Deal win momentum should help to post strong growth in the range 13‐15% for FY22 on a lower base. It should be able to maintain current EBIT margin of 16‐17%, led by improved employee pyramid, higher offshoring and other productivity measures, even though it faces headwind of wage hike in FY22. The stock trades at rich valuation of PE of 31x on FY23 earnings. Initiate coverage on the stock with ADD rating.
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