CMP: Rs 4364 |
Target Price: Rs3300
■ Q2FY22 operating performance beat our expectations. Revenue grew 12.8% QoQ to USD350.1mn (13.4% CC). EBITDAM expanded ~20bps QoQ to 20.5% on the back of revenue acceleration and operating efficiencies, which negated the salary hike impact.
■ The company is confident of delivering industry-leading double-digit revenue growth on the back of strong deal wins, healthy deal pipeline and broad-based revenue growth. MTCL remains confident of delivering 20%+ EBITDAM in FY22.
■ Deal wins remained healthy in Q2 at USD360mn, albeit moderated a bit from record USD504n in Q1. Management indicated that the deal intake remains well-balanced across annuity and transformational deals.
■ We raise our FY22E/23E/24E EPS by 7.5%/8.4%/7.9%, factoring in Q2 performance beat. We maintain Sell on the stock with a revised TP of Rs3,300 at 30x Sep'23E EPS (earlier Rs3,070), considering rich valuations and anticipated pressure on margins.