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Result Highlights

* Reported inline performance with revenue of $288.2 mn (up 5.1% QoQ) with INR revenue of Rs 21,093 mn (up 4.2% QoQ). The INR revenue growth was impacted by INR appreciation in the quarter. Continues to see strong demand environment for digital, data and cloud technologies.

* EBIT margin declined by 103 bps QoQ to 18.6% due to higher employee cost (up 4.1% QoQ) and higher other expenses (up 13.4% QoQ). PAT margin declined by 110 bps QoQ to 15% on higher expenses in the quarter.

* Deal TCV continues to see strong momentum as it increased by 20% QoQ to $375 mn in Q4FY21.

* LTM attrition was down 40 bps QoQ at 12.1% in Q4FY21. Employee utilization increased by 120 bps QoQ to 84.3%, which is expected to decline with more hiring in coming quarters.

* Cash and investment with the company increased by $3bn QoQ to $28bn.

* DSO improved by 1 day QoQ to 60 days, led by focus on better working capital management.

* FY22 Guidance: Has guided for double digit revenue growth in FY22, along with sustainable EBITDA margin of 20%+.

Our view: The recovery continues as the company posted second consecutive quarter of 5% +USD revenue growth led by strong deal momentum in digital, cloud and data. Travel vertical, which was adversely impacted due to pandemic, is showing strong sequential growth. TTM book to bill ratio of 1.3x provides strong revenue visibility for FY22. It would continue to make investments to boost growth and is expected to maintain sustainable EBITDA margin of 20%+. The stock trades at 16x on FY23 earnings. Initiate coverage with ADD Rating on the stock.

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