Dolat Capital Market's research report on Tata Consultancy Services
Infosys reported a revenue growth of 2.0% QoQ in CC terms (DE 3.3%) lower due to off-shoring mix shift while volume growth was strong at 4.6% QoQ. OPM stood at 24.5% (DE 24%) led by better utilization (82.2%) and lower than expected hike impact (130bps). Announced Dividend of Rs. 15 and Market Buyback of Rs. 9.2Bn. Announced guidance for FY22 at 12%-14% in CC terms (inline to consensus) and OPM guidance at 22-24% (FY21: OPM 24.5%) was a slight disappointment as they do not see much upside potential, citing gradual return of discretionary cost as reason for lower OPM Guidance. TCV signings were weak at $2.1Bn (52% of this is Net-New) but TTM TCV is still strong at $14.1Bn (66% Net-New) and up 56% on YoY basis. Pipeline remains in good shape & commentary on Demand is positive.
Outlook
Given in-line results and strong revenue guidance but a slightly disappointing OPM guidance, we largely retain our estimates as gains from Revenue guidance get negated by lower OPM and assign Accumulate view with TP of Rs. 1,520 (27x on FY23E EPS of Rs. 56).
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