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Our view

It posted strong sequential 7%+ QoQ USD growth, which was broadbased across verticals with improved traction in the travel segment. Deal win momentum remained strong as TCV for quarter grew by 34% QoQ led by strong deals wins in digital, cloud and data.  TTM book to bill ratio of 1.4x provides strong revenue visibility for FY22. The newly launched healthcare segment is a step in the right direction. It has stepped up hiring and is well placed to cater to strong demand scenario.  It would continue to make investments to boost growth and is expected to post high teen revenue growth for FY22, while maintaining EBITDA margin of 20%+. The stock trades at 26.1x on FY23 earnings. We maintain ADD with target price of Rs 2,735

Result Highlights

* Revenue growth was above estimate‐ Delivered strong performance as revenue grew 7.7% QoQ to $310.5 mn. In INR terms, growth was 8.6% QoQ led by INR depreciation. The growth was broadbased and aided by traction in travel segment and North America market. EBIT margin declined by 90 bps QoQ to 17.7% which was as per expectation led by higher hiring in the quarter.

* Deal momentum remained strong as TCV for the quarter grew 34% QoQ to $504mn( all time high)

* DSO declined by 3 days QoQ to 57 days. Added 7 new clients compared to 4 in the previous quarter.

* Utilisation decreased by 100 bps QoQ to 83.2%( still strong) led by more hiring in the quarter. Trailing 12 month attrition increased by 160 bps QoQ to 13.7% led by higher demand for talent. Increase in offshoring trend continued during the quarter as offshore effort mix grew 60 bps QoQ to 83.5%.

* Cash and equivalent increased by Rs1bn to Rs29bn.

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