CC revenues grew by 37.4% y-o-y continuing strong outperformance seen in past four quarters, but EBITDA margin lagged estimates owing to a one-time bonus; net staff additions stayed strong. Growth momentum likely to continue given a strong order book, robust deal pipeline, improving deal size, presence in high-growth verticals and hyper-digitisation and technology adoption across industries. EBITDA margin to remain in a narrow band in FY22 despite headwinds, given strong revenue growth, higher offshoring, and better realisations in complex projects. We expect USD revenue/earnings to clock a 24%/26% CAGR over FY2021-FY2024E.
Outlook
We retain a Buy on Tata Elxsi with a revised PT of Rs. 5,000, as revenue is set to grow at twice the industry average, margin profile is superior and company has differentiated technological capabilities.