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Our view

The revenue growth was slight above expectation led by ramp up of Injazat deal; while sequential decline in margin was as per expectation. It continues to benefit from strong demand environment as the strategy is to remain  focused on growth while maintaining stable net profit margin of  14‐15%. It is expected to manage near term margin pressure through improved employee pyramid and positive operating leverage. Its investments in cloud and data will continue to help it to ride the digitalization wave. We maintain BUY on the stock with revised target price of   R 4,950

Result Highlights

* Reported revenue of $470.2 mn with revenue growth at 5.1% QoQ in USD terms was slightly better than expected, led by the ramp up of Injazat deal. Growth was broad‐based across verticals with softness in manufacturing as it declined by 6.7% QoQ. India business saw 20% QoQ decline in Revenue ( impact of 2nd covid wave)

* EBIT margin declined by 300 bps QoQ to 16.4%(as per expectation) as it advanced its wage hike cycle by 1 quarter to Q1FY22 and there was absence of 1 time benefit of 80 bps in last quarter. EBIT declined by 10.2% QoQ in the quarter  

* Excluding trainees, utilisation increased by 190 bps QoQ to 84.1%

* Offshore revenue mix improved by 140 bps QoQ to 57.3% as per the industry trend.

* Added 23 clients in the quarter compared to 14 in Q4FY21.  DSO increased by 4 days QoQ to 98 days.

* It acquired Cuelogic Technologies, a Digital Engineering and Outsourced Product Development company, during the quarter. Also  announced special dividend of Rs 10/ share on completion of 5 years of listing

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