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Overall inline operating performance  

Our view

Overall, we remain positive on the stock as the robust demand environment would help it to report double digit revenue growth for FY22/FY23. Deal booking remains strong and would help to sustain growth momentum. There are near term margin headwind in this supply constrained environment. However, in medium term, we expect it to maintain stable margin  aided by positive operating leverage. We maintain BUY Rating in the stock with revised target price of Rs 4,451.

Result Highlights

* Reported revenue of Rs 488.8bn( up 4.3% QoQ in INR terms, up 3.1% in USD terms). The growth was broadbased led by strong performance in BFSI( up 17.9% YoY) and retail( up 20.4% YoY).

* EBIT margin declined by 60 bps QoQ to 25% on high subcontracting cost in this supply constrained environment and other expenses.  

* Deal booking remained strong as it reported TCV of $7.6bn in the quarter.

* $100mn+ client up by 10 YoY $50mn+ clients up by 21 YoY.

* Added around ~28,000 employees in the quarter to reach total employee count of 556,986

* LTM attrition increased by 340 bps QoQ to 15.3%. However, quarterly attrition has almost stabilised

* Announced share buyback of Rs 18,000 cr at Rs 4,500 / share. Also announced interim  dividend of Rs 7/ share

Valuation

The stock trades at PER of 28.9x on FY24E EPS. Robust deal booking and growing share of digital revenue provides strong visibility about revenue and margin outlook. Improved demand environment over next 2‐3 years with stable margin and industry leading return ratios would support current valuation. We value the stock at 33x on FY24 earnings, arriving at target price of Rs 4,451/share  

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