IGI Logo

Consistent performance with record order intake

Our view and valuation

Overall, the performance was inline with broad estimates. While, revenue grew by 3.5% QoQ in INR terms, margin was flat sequentially. The growth remains broadbased across verticals. We remain positive on the stock as the robust demand environment would help it to sustain growth momentum in FY23. Deal booking remains strong across vertical led by multi‐year tech upcycle.  Employee addition has been robust over last few quarters and provides robust revenue growth visibility. Though, the employee attrition remains high, but the incremental attrition has moderated. We expect it to maintain stable operating margin over medium term    aided by positive operating leverage, improving employee pyramid and moderation in employee attrition. Certain costs related to admin and travel are expected to increase as offices open up post 3rd covid wave but these costs are not expected to reach precovid level as IT companies are expected to move to hybrid model of work. We estimate revenue CAGR of 12.3% over FY22‐24E with average EBIT margin of 26.2%

We maintain BUY Rating on the stock with revised target price of Rs 4,336/share at 32x on FY24E EPS. We have reduced our target multiple from 33x to 32x to account for higher cost of capital going ahead. The stock trades at PER of 27.2x on FY24E EPS.

Result Highlights

Reported revenue of Rs 506 bn, ( up 2.6% QoQ in USD terms, up 3.5% QoQ in INR terms). The growth was led by strong performance in Retail and CPG( up 22.1% YoY), Manufacturing( up 19% YoY), Communication and media( up 18.7% YoY).

EBIT margin was flattish QoQ, down 7 bps QoQ (down 189 bps YoY) to 24.96%, aided by improving employee pyramid and other efficiency measures.

Deal booking momentum remained strong as it signed highest ever deal booking TCV of $11.3bn( with 2 large deals of $1bn) vs TCV of $7.6bn for Q3FY22. Clients: $100M+ up by 10 YoY ; $50M+ up by 19 YoY ; $10M+ up by 52 YoY

Added 35,209 employees during the quarter to reach 592,195 employees, with higher focus on fresher hiring.

LTM attrition increased by 210 bps to 17.4% vs 15.3% in Q3FY22. However, the incremental attrition has moderated for the company.

Declared final dividend of Rs 22/ share

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632

Above views are of the author and not of the website kindly read disclaimer