TECH M DEAL WINS REMAIN HEALTHY

News: TechM) reported strong numbers on revenues while margin performance was weak. The company’s revenues increased by 5.4% QoQ in constant currency terms, while it was up 4.9%in dollar terms. In terms of geographies , the revenue growth was aided by 8.6% in Europe ( 26% of mix) , while the sequential growth in US/ RoW was at 3.6% each. In terms of verticals, the growth was aided by Telecom ( 41% mix) grew by 4.1%QoQ, while BFSI ( 17% mix) has reported 18.5% QoQ growth ( base quarter it was down 1.6% QoQ). The company’s EBIT margin dip 160bps QoQ to13.2% due to higher employee and amortisation expenses.  The company’s order book (net new order wins) up 48% in FY22 and stands at  to US$3.2bn. The company added 6.1K employees in Q4 and 30K for FY22 , taking its total employee base at 151K.  LTM attrition remained flat QoQ to 23.5%. Board of directors re-appointed Mr CP Gurnani as a MD and CEO from Aug 10,2022 to 19th Dec 2023.  Current CFO is retiring on 31st May 2022, the company has appointed Mr Rohit Anand as new CFO with effect from Jun 01,2022. He has been with Tech M for last 1.5 years before spending 18+ years in GE Electric. The company declared total dividend of Rs.45 per share for FY22, 71% payout

Vievs: LTM attrition was flat QoQ which means, attrition might taper down in subsequent quarters.  The deal wins remained healthy as it is fifth consecutive quarter of US$700mn+ new deal wins which provides visibility for future revenues. The company’s margin at 14.6% in FY22 were below than guided number of 15% , however margins are expected to improve going forward on i) Price hikes taken in FY22 would be reflected in FY23 ii) exiting low margin portfolios iii) continued fresher additions iv) continued focus on offshoring. The company also made certain leadership changes in America and Europe regions which are also expected to benefit near term performance. The company is confident of its growth in FY23 despite some near term macro headwinds

Impact: Positive