■ PSYS delivered a better-than-expected operating performance in Q1FY22. Revenue grew 9.2%/27.3% QoQ/YoY to USD166.8mn, ahead of our expectations, driven by continued traction in the Services business. Adjusted EBITM expanded 100bps QoQ to 14.1%.
■ Services revenues grew 11.5% QoQ to USD145mn, driven by 8.8% volume growth and 2.5% growth in blended realizations. IP-led revenues declined 4.0% QoQ (up ~3.2% after adjusting for accounting change for the reseller IP business).
■ Revenue growth was broad-based across Healthcare & Life Sciences (15.9% QoQ), BFSI (11.7%), and Technology Companies & Emerging verticals (5.1%). The company signed deals worth TCV of USD244.8mn in Q1, including USD147.7mn in new business TCV.
■ We raise EPS estimates by 3-7% for FY22-24, factoring in the Q1 beat and a robust deal intake. Amid strong demand, high attrition and talent war may weigh on EBITDAM. Retain Hold with a revised TP of Rs3,000 (previously Rs2,850) at 28x Jun'23E EPS.