Target Price: Rs4850
* PSYS reported better-than-expected operating performance in Q4. Revenues grew 9.1% QoQ/42.2% YoY (6.8%/36% organic) to USD217.3mn on the back of strong consistent growth in the Services business (14.7% QoQ). EBITM was flat sequentially at 14%.
* Revenue growth was broad-based across BFSI (9.8% QoQ), Healthcare & Life Sciences (9.1%) and Software, Hi-tech & Emerging industries (8.7%). Order booking stood at USD361mn (1.7x book-to-bill) in TCV, including USD195.1mn of new business TCV.
* Services revenues grew 14.7% QoQ to USD198mn, driven by 10.8% volume growth. Services has posted an ~11% CQGR in the last four quarters, and management remains confident of sustaining growth momentum. IP-led revenues declined 27% QoQ largely due to the restructuring of the CE/CLM IP deal with IBM to a T&M services model.
* We raise our FY23/FY24 EPS estimates by 6.5%/4.9%, factoring in Q4 performance, integration of the Media Agility acquisition and higher EBITM assumptions. We maintain Buy with a TP of Rs4,850 at 35x Mar'24E EPS (earlier Rs4,600), considering favorable industry tailwinds and a strong earnings trajectory (~24% EPS CAGR over FY22-24E).