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Result Highlights

* Reported revenue of $3,613mn (up 2.8% QoQ reported and up 2% QoQ in CC terms). In INR terms, it reported revenue Rs 263.bn (up 1.5% QoQ), a slight miss on consensus estimate. It is to be noted that there was adverse impact of INR appreciation in reported INR revenue for the quarter; and also the revenue growth for the quarter was impacted by some time being taken in ramping up large deals. Digital revenue now accounts for 51.5% of revenue compared to 50.1% in Q3FY21 and grew 34.4%YoY in cc terms.

* EBIT margin declined by 94 bps QoQ to 24.5% on expected lines, led by wage hike in the quarter

* Large deals win came in at $2.1bn (highest deal booking in 4th quarter over the last 3 years), led by strong traction in digital, cloud and data related technologies

* LTM attrition came in at 15.2% vs 10% in Q3FY21 due to higher demand for talent in the market

* Announced final divided of Rs 15/share, which along with interim dividend of Rs 12/share, comes to be Rs 27/share for FY21 (54% increase over FY20)

* Also announced share buyback of equity shares amounting to Rs 92bn, at a price not exceeding Rs 1,750/share

* FY22 guidance: Strong revenue guidance of 12‐14% revenue growth in cc terms with operating margin band of 22‐24%

Our view: While the revenue performance was less than expected in the quarter, but robust deal booking and deal pipeline in digital, cloud and data offers strong revenue growth visibility for FY22 and ahead. It should be able to achieve stable operating margin for FY22, supported by positive operating leverage, even though, it faces headwind in terms of increased cost such as salary hikes and increased travel expense. Share buyback would restrict downside risk in the near term. The stock trades at 22.8x on FY23 earnings. Initiate coverage on the stock with Buy Rating

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