Target Price: Rs3400
* MTCL delivered in-line revenue in Q1FY23, while margins beat estimates. Revenue grew 4.0% QoQ (CC 5.5%) to USD399.3mn, in line with our expectations. EBITDAM expanded marginally by 10bps QoQ to 21.1%, exceeding our estimate by 70bps.
* Deal wins remained solid in Q1 with a record TCV of USD570mn. Management indicated that the deal intake remains well-balanced across annuity and transformational deals, and the deal pipeline is healthy, giving confidence in growth sustainability.
* The company is confident of maintaining revenue growth momentum in Q2 and is cautiously optimistic for H2 amid macro uncertainties and difficulty in predicting clients' spending behavior. MTCL expects to sustain over 20% EBITDAM for FY23.
* We tweaked FY23E/FY24E/FY25E EPS by -0.1%/0.3%/0.4%, factoring Q1 performance. We maintain Buy with a TP of Rs3,400 at 25x Jun'24E EPS, considering strong execution, margin defense and benefits from merger synergies with LTI in the medium term.