Tech Mahindra (TECHM) Q4FY21 revenue grew by 0.7% QoQ in CC (+1.6% in USD) versus our forecast of +1.7% QoQ. Enterprise segment (60.4% of revenue) has grown by 1.8% QoQ in USD with BFSI (16.5% of total revenue) outperforming with 4.9% QoQ growth and Retail, transport & logistics (7.5%) underperforming with QoQ decline of 3.2%, said IDBI Capital in its report.
Communications vertical (39.6%) has grown by 1.4% QoQ in USD. EBIT margin improved by ~55bps QoQ to 16.5%, at a 25-quarter high. The QoQ improvement was driven by operational efficiencies including increase in offshoring & utilization and lower D&A partly offset by increase in SG&A cost and variable payouts. Headcount continues to see QoQ decline (-0.7% to 121k) and attrition has inched up a bit to 13.3% versus. 12.4% in Q3.
Commenting on the result review, IDBI Capital said, "While TECHM's Q4Y21 revenue was slightly lower than our forecast, EBIT margin was a beat. Revenue grew by 0.7% QoQ in CC (+1.6% QoQ in USD terms). EBIT margin improved by ~55bps QoQ to 16.5%, a 25-quarter high. However, recurring EPS of Rs13, -13.7%/+10.5% QoQ/YoY was a miss, impacted by FX loss and higher ETR.
In Q4FY21, TECHM has secured new deals with TCV of USD 1,043 million and is confident of similar run-rate in Q1FY22. For FY22, TECHM has guided for a double-digit revenue growth and EBIT margin of 15%+, higher than our expectation and versus 14.2% in FY21.
While we factor higher EBIT margin for FY22/23, it gets largely offset by higher ETR. We fine-tune our forecast to revenue/EPS CAGR of 9.5%/13.3% over FY21-23. We maintain BUY with new TP of Rs1,118 (vs. Rs1,108) based on PER of 17x FY23E."
Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.