BUY
CMP: Rs1337
Target Price: Rs1460
* HCLT delivered a strong revenue beat in Q3, aided by solid growth in Services and a sharp rebound in Products & Platforms (24.5% QoQ CC). Revenue grew by 7.6% QoQ in CC terms, the highest in the last 46 quarters. EBITM was flat at 19.0%, below expectations.
* It signed 8 large services and 8 product deals across financial services, technology & services, and life sciences & healthcare for a total new deal TCV of USD2.1bn (64% YoY). Strong broad-based demand and robust deal intake augur well for revenue acceleration.
* The company has reiterated double-digit revenue growth guidance in CC for FY22. It has also retained 19-21% EBITM guidance for FY22, considering supply-side challenges and planned investments in Mode 2 capabilities and markets.
* We tweak FY22-24 EPS estimates by -1% to 2.4%, factoring in Q3 revenue beat, margin miss and lower ETR. Revenue growth is encouraging; however, pressure on Services margin limits earnings upgrade. Retain Buy with a TP of Rs1,460 at 23x Dec'23E EPS.
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