*Tech M Result First cut: Strong performance overall. Revenue growth as well as margins surprise positively, growth fairly broad based*
✅ Revenue grew by 3.9% in CC terms to $ 1,384 mn and was ahead of our expectations of 2.8% growth.
✅ Revenue in US$ terms grew 4.1% QoQ against our est of 3%
✅ EBIT margins came in 15.2%, 95 bps higher than our est of 14.2% but 133 bps lower QoQ. This outperformance was on account of operating leverage coming into play due to a strong revenue growth
✅ The company reported a strong new deal TCV for the second quarter in a row, signing US$815 mn worth of deals, with 352 mn in the telecom business and US$
✅ All verticals posted positive growth with telecom business (40% of topline) growing 3% QoQ. This is the fourth consecutive quarter of positive growth in the vertical and it has grown by ~13% in the past 12 months. Manufacturing and BFSI verticals continued their recovery, growing 4.7% and 3.7% respectively while technology and retail verticals rebounded after a poor Q4FY21, growing 8.1% and 3.2% QoQ respectively
✅ In terms of geography, Americas grew by 6.8% QoQ. This is extremely encouraging given that it struggled throughout FY21, when it degrew 2.6% for the year. Europe continued its robust recovery, growing 6.6% QoQ on the back of three consecutive quarters of strong performance. RoW (26% of topline) disappointed with a degrowth of 3% after a strong performance in FY21 where it was the only geography to post positive growth.
✅ Top 5/10/20 clients posted mid single digit growth. This is the fourth consecutive quarter of growth after a dismal H1CY20. The company also added a new client in each of the US$50/20/10 mn bracket.
✅ Headcount was increased by 4% QoQ as the company added ~5,200 employees on a net basis
✅ Attrition shot up 400 bps to 17%, this is the highest attrition of all domestic large cap cos and is probably the only negative form the overall result.
*Our View*
✅ This is an extremely encouraging set of results on account of a broad based growth, positive margin surprise and top client growth. Consecutive quarters of strong deal wins suggest a robust pipeline as well. While attrition remains a concern, growth in the telecom segment as well as its US$382 mn new deal signing gives us demand visibility. Given that the stock trades at 22x 1y fwd EPS which is ~30-40% cheaper than its large cap peers, the stock can see some positive momentum going forward
Regards,
*Edelweiss Wealth Research*
✅ Revenue grew by 3.9% in CC terms to $ 1,384 mn and was ahead of our expectations of 2.8% growth.
✅ Revenue in US$ terms grew 4.1% QoQ against our est of 3%
✅ EBIT margins came in 15.2%, 95 bps higher than our est of 14.2% but 133 bps lower QoQ. This outperformance was on account of operating leverage coming into play due to a strong revenue growth
✅ The company reported a strong new deal TCV for the second quarter in a row, signing US$815 mn worth of deals, with 352 mn in the telecom business and US$
✅ All verticals posted positive growth with telecom business (40% of topline) growing 3% QoQ. This is the fourth consecutive quarter of positive growth in the vertical and it has grown by ~13% in the past 12 months. Manufacturing and BFSI verticals continued their recovery, growing 4.7% and 3.7% respectively while technology and retail verticals rebounded after a poor Q4FY21, growing 8.1% and 3.2% QoQ respectively
✅ In terms of geography, Americas grew by 6.8% QoQ. This is extremely encouraging given that it struggled throughout FY21, when it degrew 2.6% for the year. Europe continued its robust recovery, growing 6.6% QoQ on the back of three consecutive quarters of strong performance. RoW (26% of topline) disappointed with a degrowth of 3% after a strong performance in FY21 where it was the only geography to post positive growth.
✅ Top 5/10/20 clients posted mid single digit growth. This is the fourth consecutive quarter of growth after a dismal H1CY20. The company also added a new client in each of the US$50/20/10 mn bracket.
✅ Headcount was increased by 4% QoQ as the company added ~5,200 employees on a net basis
✅ Attrition shot up 400 bps to 17%, this is the highest attrition of all domestic large cap cos and is probably the only negative form the overall result.
*Our View*
✅ This is an extremely encouraging set of results on account of a broad based growth, positive margin surprise and top client growth. Consecutive quarters of strong deal wins suggest a robust pipeline as well. While attrition remains a concern, growth in the telecom segment as well as its US$382 mn new deal signing gives us demand visibility. Given that the stock trades at 22x 1y fwd EPS which is ~30-40% cheaper than its large cap peers, the stock can see some positive momentum going forward
Regards,
*Edelweiss Wealth Research*
#Result #Tomorrow FRIDAY
#NiftyWaala
1⃣ Britannia
2⃣ IOC
3⃣ Sun Pharma
4⃣ UPL
#VaydaWaali
1⃣ ABFRL
2⃣ Bandhan Bank
3⃣ BHEL
4⃣ Chola Finance
5⃣ Exide
6⃣ Dr Lal Pathlabs
7⃣ Marico
8⃣ PI Industries
9⃣ Shriram Transport Finance
#CashWaali
Blue Dart
LT Foods
Dalmia Bharat Sugar
Equitas SFB
HIL
HOCL
Jindal Saw
JK Paper
JSW Energy
Kansai Nerolac
KEC Int
Macrotech
Nazara
NELCO
NIIT
Rossari
Sunflag Iron
V-Guard
Asahi India
Sundaram Clayton, etc
#NiftyWaala
1⃣ Britannia
2⃣ IOC
3⃣ Sun Pharma
4⃣ UPL
#VaydaWaali
1⃣ ABFRL
2⃣ Bandhan Bank
3⃣ BHEL
4⃣ Chola Finance
5⃣ Exide
6⃣ Dr Lal Pathlabs
7⃣ Marico
8⃣ PI Industries
9⃣ Shriram Transport Finance
#CashWaali
Blue Dart
LT Foods
Dalmia Bharat Sugar
Equitas SFB
HIL
HOCL
Jindal Saw
JK Paper
JSW Energy
Kansai Nerolac
KEC Int
Macrotech
Nazara
NELCO
NIIT
Rossari
Sunflag Iron
V-Guard
Asahi India
Sundaram Clayton, etc
*Rollovers to Aug Series – Par Rolls, Higher MW Position & Subdued Basis, Probability of Range bound move with Sector Rotation*
*Nifty Roll @ 83% (v/s 85%), OI base (9.5 Mn shrs v/s 9.7 Mn shrs), BankNifty Roll 81% (v/s 84%), OI base (20 lac v/s 19 lac ), MW 92%(v/s 89%),OI base up by 3%, in absolute no of shrs(4367 Mn v/s 4230 Mn), Roll cost level in most of stocks is ~30 -32 (48 -49 v/s 56-58 v/s 47 -48 bps).*
================================================
• Market remained sluggish for July series.
• Writers ruled the July series as Indices & stocks remained rangebound unlike previous three series.
• FII sold highest (~19k cr) since Jan’21 in cash for Jul series whereas DII continue to remain buyers (~15k cr).
*Volatility:*
• India VIX maintain lowest band (8-15) since two series. Skews remained flat in July series.
• *Current series skews comparatively flat indicating range bound move & drift may continue.*
*Marketwide:*
• In absolute number of shares Aug series will start with ~3% higher OI of 4367 Mn shrs(~INR 1886 Bn) as against 4230 Mn shrs(~INR 1767 Bn) of previous expiry - *indicating majority position rolled over to next series despite of big drifts.*
*Option Data:*
• Nifty PCR_OI for Jul series opened at 1.27 (1.39 v/s 1.56 v/s1.70 ).15000 PE having highest OI of ~26 lac followed by 15500 OI of 21 lacs. 16000 CE with 18 lacs followed by 16500 @15 lacs(26th Aug) *indicating lowest hedge in previous 6 series.*
*Road Ahead:*
- Implied vol touched lowest band (~10-12,) first time post Mar’20sell off. Fear receding but probability of mean aversion increases.
*Above 15950 -16k probabilities of up move towards 16200, 15500 immediate supports. Sentiment may turn negative below 15400.*
*Sector:*
• Long Creation/ Carry Fwd :Banking & POWER
• Short Creation/ Carry Fwd: IT & Auto
*Stocks:*
• Stocks where rolls picked up: NTPC, BJAUT, AL, LPC, PIDI & LT.
• *Equirus Rollover Picks(Long Bias Based on Rollover (10-12% move, sl 3.5%):, BOB, PIEL & BPCL.*
Stay Safe |Quant Desk |Equirus
*Nifty Roll @ 83% (v/s 85%), OI base (9.5 Mn shrs v/s 9.7 Mn shrs), BankNifty Roll 81% (v/s 84%), OI base (20 lac v/s 19 lac ), MW 92%(v/s 89%),OI base up by 3%, in absolute no of shrs(4367 Mn v/s 4230 Mn), Roll cost level in most of stocks is ~30 -32 (48 -49 v/s 56-58 v/s 47 -48 bps).*
================================================
• Market remained sluggish for July series.
• Writers ruled the July series as Indices & stocks remained rangebound unlike previous three series.
• FII sold highest (~19k cr) since Jan’21 in cash for Jul series whereas DII continue to remain buyers (~15k cr).
*Volatility:*
• India VIX maintain lowest band (8-15) since two series. Skews remained flat in July series.
• *Current series skews comparatively flat indicating range bound move & drift may continue.*
*Marketwide:*
• In absolute number of shares Aug series will start with ~3% higher OI of 4367 Mn shrs(~INR 1886 Bn) as against 4230 Mn shrs(~INR 1767 Bn) of previous expiry - *indicating majority position rolled over to next series despite of big drifts.*
*Option Data:*
• Nifty PCR_OI for Jul series opened at 1.27 (1.39 v/s 1.56 v/s1.70 ).15000 PE having highest OI of ~26 lac followed by 15500 OI of 21 lacs. 16000 CE with 18 lacs followed by 16500 @15 lacs(26th Aug) *indicating lowest hedge in previous 6 series.*
*Road Ahead:*
- Implied vol touched lowest band (~10-12,) first time post Mar’20sell off. Fear receding but probability of mean aversion increases.
*Above 15950 -16k probabilities of up move towards 16200, 15500 immediate supports. Sentiment may turn negative below 15400.*
*Sector:*
• Long Creation/ Carry Fwd :Banking & POWER
• Short Creation/ Carry Fwd: IT & Auto
*Stocks:*
• Stocks where rolls picked up: NTPC, BJAUT, AL, LPC, PIDI & LT.
• *Equirus Rollover Picks(Long Bias Based on Rollover (10-12% move, sl 3.5%):, BOB, PIEL & BPCL.*
Stay Safe |Quant Desk |Equirus
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