The Company beats estimates on profit and growth in the second quarter of financial year 2022-23 (Q2FY23) as it continued to see strong demand for its services.
Q2FY23 Earning Key Highlights
As per the management, the growth this quarter has come with good profitability. It has been able to improve its operating margins by 90 basis points. Importantly, this quarter comes on the back of five quarters of consistent growth.
However, the management added a note of caution on Europe. It needs to remain very vigilant and cautious in interaction with clients. The Company does see an increasing sense of caution in the discussion that we have but it has not yet materialised in its order pipeline.
The firm reported total contract value (TCV) of $8.1 billion, which was slightly lower than $8.2 billion signed in Q1. The TCV did not have any large deals as these deals were taking time to close. The company is, however, confident that it will retain its TCV in that range, it is only natural to expect some softness given the macro environment, especially in Europe.
Valuation & View
Demand for its services continues to be very strong. The Company registered strong, profitable growth across all its industry verticals and in all its major markets. Its order book is holding up well, with a healthy mix of growth and transformation initiatives, cloud migration and outsourcing engagements. Majority of risks are built in its price. At the CMP of Rs 3119, the stock is trading at annualised P/E multiple of 28.6 times with the annualised EPS of Rs 108.82, which is fairly valued.
Globe Capital Market Limited (“GCML”) is a Stock Broker registered with BSE, NSE and MSEI in all the major segments viz. Capital, F & O and CDS segments. GCML is also a Depository Participant and registered with both the Depositories viz. CDSL and NSDL. Further, GCML is a SEBI registered Portfolio Manager. GCML includes subsidiaries, group and associate companies, promoters, directors, employees and affiliates.
Globe Commodities Limited, Globe Derivatives and Securities Limited & Globe Fincap Limited are subsidiaries of GCML. Rolex Finvest Private Limited, A to Z Consultants Private Limited, A to Z Venture Capital Limited, M. Agarwal Stock Brokers Private Limited, A M Share Brokers Private Limited, Shri Adinath Advertising Company Pvt. Ltd., Orient Land base Private Limited, Bolt Synthetic Private Limited, Price ponder Private Limited and Lakshya Impex Private Limited are associates of GCML. Globe Comex International DMCC is step down subsidiary of GCML.
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