It 20211001 Mosl RP PG014

September 2021 Results Preview | Sector: Technology
Technology
Result Preview Strong 2Q growth momentum despite supply challenges
Demand strong, growth outlook to remain intact
 We expect a median growth of 5.4% CC QoQ in 2QFY22 in our IT Services
coverage universe. Topline performance is expected to remain strong across our
coverage, led by a robust demand environment and deal wins. Tier II IT should
continue to outpace Tier I IT in terms of growth.
 Tier I companies should deliver revenue growth between 3.9% and 6.9% QoQ
CC, while Tier II companies will have a wider growth band (4.9-10.5% QoQ CC).
 Management commentary in FY22 will remain strong, with better than usual
seasonality in 3Q, which can aid the full year outlook. We expect INFO to again
raise its FY22 revenue growth guidance, while HCLT should see an improvement
in its growth trajectory to low teens. Commentary on medium term growth will
Coforge be a key monitorable.
Cyient  Recent earnings from industry peer ACN indicate a strong and sustainable
HCL Tech demand environment, with continued spend on Digital and Cloud adoption.
Infosys INFO to lead organic revenue growth within Tier I, MTCL in midcap
L&T Infotech  INFO should lead revenue growth in Tier I IT (+5.7% QoQ CC) on an organic basis,
L&T Technology while WPRO should deliver 6.9% QoQ reported growth. This will be followed by
Mindtree TCS (+4.2% QoQ CC), TECHM (+4.2% QoQ CC), and HCLT (3.9% QoQ CC).
Mphasis  Among Tier II IT, we expect upbeat revenue traction across our coverage
Persistent universe, with MTCL leading the pack with 8.5% QoQ CC growth, aided by deal
TCS ramp ups and broad based growth. PSYS and MPHL (Direct business) should also
Tech Mahindra deliver strong performance in 2QFY22, with a growth above 6% QoQ.
Wipro Supply-side issues a key headwind for margins
Zensar  We see a dip in margins for most companies on supply-side pressures (attrition
and hiring), along with a wage hike impact (INFO, WPRO, PSYS, and ZENT).
Among Tier I IT, TCS should be the exception with a margin expansion, while
WPRO will have the highest erosion (180bp) on account of a wage hike, absence
of one-time tailwind and Capco impact. In Tier II IT, COFORGE should buck the
trend with 200bp margin increase on better IP margin, while ZENT will see a
340bp dip due to a wage hike and sales related investments in 2QFY22.
 While skill specific cost has increased in the market, we expect companies to try
to right size their pyramids in order to offset the increase. Hiring across our IT
coverage will continue to remain high as companies try to fulfill demand and
backfill growing attrition, which will be a key focus area for investors.
 Tier I IT companies are better placed to absorb the supply pressure, given their
capabilities with regard to training employees in newer skills.
Expect solid PAT growth
 We expect our IT coverage universe to deliver a PAT growth of ~12% YoY and 1%
QoQ. TCS/INFO is expected to report a PAT growth of 16%/9% YoY. PAT growth
for HCLT would be subdued on account of a YoY dip in margin. We expect
TECHM to post the highest YoY PAT growth within Tier I IT on strong margin
expansion over the past four quarters.
Research Analyst: Mukul Garg (Mukul.Garg@MotilalOswal.com)

Research analyst: Akshay Ramnani (Akshay.Ramnani@motilaloswal.com)
October 2021
Investors are advised to refer through important disclosures made at the last page of the Research Report. 1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Tier II IT is expected to report a strong PAT growth (25% YoY and 3% QoQ). This
will be driven by strong revenue growth, but will be partially offset by lower
EBIT margin. We expect PSYS/COFORGE/CYL to lead the Tier II IT pack in terms
of YoY PAT growth.
Valuation and view: Prefer INFO/HCLT/LTTS/MPHL/ZENT/CYL
 While sector valuations remain elevated, we remain positive as the demand
environment continues to improve. Double-digit topline growth should be
sustainable in the medium term. We see continued strength in demand, led by:
1) larger deals on a full-scale Digital transformation, 2) increased volume of cost
takeout deals, and 3) higher spends on Cloud migration by large corporates.
 Continued strong sequential growth momentum and expectation of qualitative
commentary on growth beyond FY22 should help sustain the rally in IT stocks,
despite their premium valuations.
 We prefer Tier I IT over Tier II peers given their relative valuation attractiveness
and tendency to narrow down the valuation differential over time. Among Tier I
IT, we like INFO and HCLT. We expect INFO to deliver top quartile growth,
backed by strong deal wins. HCLT is one of the key beneficiaries of Cloud
adoption at scale, given its expertise in IMS.
 In Tier II IT, we prefer LTTS, MPHL, ZENT, and CYL. We expect LTTS to deliver
strong growth over the medium term, led by robust demand for ER&D services.
MPHL’s Direct business is seeing industry leading growth. We expect this growth
momentum to continue. ZENT remains a high confidence play on the back of a
business recovery due to change in the management and adoption of a new
strategy.
Exhibit 1: Expect Tier I revenue (USD) to grow by ~4% QoQ
Revenue (USD m) Revenue (INR b)
Company 2QFY22 1QFY22 QoQ (%) 2QFY21 YoY (%) 2QFY22 1QFY22 QoQ (%) 2QFY21 YoY (%)
TCS 6,380 6,154 3.7% 5,424 17.6% 473 454 4.1% 401 17.8%
INFO 3,966 3,782 4.9% 3,312 19.8% 294 279 5.4% 246 19.6%
WPRO 2,566 2,415 6.3% 1,992 28.8% 192 183 5.0% 151 26.8%
HCLT 2,808 2,720 3.3% 2,507 12.0% 208 201 3.7% 186 11.9%
TECHM 1,432 1,384 3.5% 1,265 13.2% 106 102 4.1% 94 13.2%
Aggregate 17,153 16,454 4.3% 14,500 18.3% 1,273 1,218 4.5% 1,078 18.1%
EBIT margin (%) Adjusted PAT (INR b)
TCS 26.2 25.5 70.0 26.2 - 98 90 8.4% 85 15.7%
INFO 22.3 23.7 -140.0 25.3 -300.0 53 52 1.6% 49 8.8%
WPRO 16.1 17.8 -180.0 18.6 -250.0 27 32 -17.3% 25 7.8%
HCLT 19.0 19.6 -60.0 21.6 -260.0 32 32 -2.0% 32 0.4%
TECHM 14.8 15.2 -40.0 14.2 60.0 13 14 -6.2% 11 20.5%
Source: Company, MOFSL
October 2021 2
Exhibit 2: Expect Tier II revenue (USD) to grow by ~5% QoQ

Revenue (USD m) Revenue (INR b)
LTI 494 470 5.2% 405 22.2% 37 35 5.8% 30 22.2%
LTTS 215 206 4.7% 178 21.0% 16 15 5.1% 13 21.5%
MTCL 336 311 8.3% 261 28.8% 25 23 8.7% 19 29.3%
MPHL 380 363 4.6% 327 16.0% 28 27 5.2% 24 16.1%
COFORGE 213 200 6.8% 155 37.9% 16 15 8.0% 12 36.9%
PSYS 180 167 7.7% 136 32.0% 13 12 8.2% 10 32.1%
ZENT 140 127 10.1% 126 11.3% 10 9 10.8% 9 10.8%
CYL 149 144 4.0% 135 10.5% 11 11 4.5% 10 10.2%
Aggregate 494 470 5.2% 405 22.2% 37 35 5.8% 30 22.2%
EBIT margin (%) Adjusted PAT (INR b)
LTI 16.7 16.4 30.0 19.9 -320.0 5.2 5.0 4.6% 4.6 13.7%
LTTS 16.8 17.3 -50.0 13.7 310.0 2.2 2.2 3.2% 1.7 34.8%
MTCL 16.8 17.7 -90.0 16.7 10.0 3.4 3.4 -1.8% 2.5 33.0%
MPHL 15.8 16.0 -20.0 16.2 -40.0 3.6 3.4 4.9% 3.0 19.1%
COFORGE 13.5 11.5 200.0 13.8 -30.0 1.8 1.4 25.6% 1.2 44.7%
PSYS 13.3 14.1 -80.0 12.1 120.0 1.6 1.6 -1.2% 1.0 53.7%
ZENT 10.5 13.9 -340.0 14.8 -430.0 0.8 1.0 -19.6% 0.9 -7.9%
CYL 13.7 13.1 60.0 11.0 270.0 1.2 1.2 6.0% 0.8 45.3%
Exhibit 3: Cross currency growth and impact on expectations for 2QFY22 (%)
CC USD growth Cross currency
USD growth QoQ
QoQ impact (bp)
TCS 4.2% 3.7% -60
INFO 5.7% 4.9% -80
WPRO 6.9% 6.3% -60
HCLT 3.9% 3.3% -70
TECHM 4.2% 3.5% -70
LTI 5.4% 5.2% -20
LTTS 5.0% 4.7% -30
MTCL 8.5% 8.3% -20
MPHL 4.9% 4.6% -30
COFORGE 7.5% 6.8% -80
PSYS 7.9% 7.7% -20
ZENT 10.5% 10.1% -40
CYL 4.9% 4.0% -90
Exhibit 4: 2QFY22 currency highlights (INR)

Rates (INR) Change (QoQ)
USD EUR GBP AUD USD EUR GBP AUD
Average 74.09 87.35 102.12 54.43 0.43% -1.74% -1.00% -4.17%
Closing 74.24 86.10 99.88 53.65 -0.12% -2.60% -3.03% -3.75%
Source: Bloomberg, MOFSL
Exhibit 5: 2QFY22 currency highlights (USD)

Rates (USD) Change (QoQ)
EUR GBP AUD EUR GBP AUD
Average 1.18 1.38 0.73 -2.17% -1.43% -4.58%
Closing 1.16 1.35 0.72 -2.48% -2.91% -3.63%
Source: Bloomberg, MOFSL
October 2021 3
Exhibit 6: Relative performance – three-months (%) Exhibit 7: Relative performance – one-year (%)
Nifty Index MOFSL Technology Index Nifty Index MOFSL Technology Index
126 210
117 170
108 130
99 90
90 50
Sep-20
Dec-20
Sep-21
Mar-21
Jun-21
Jul-21
Aug-21
Sep-21
Jun-21
Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 8: Change in estimates
Revised EPS (INR) Earlier EPS (INR) Change (%)
FY22E FY23E FY22E FY23E FY22E FY23E
TCS 110 128 109 125 1 2
INFO 54 67 53 64 2 5
WPRO 20 24 21 24 -4 1
HCLT 51 61 50 60 2 2
TECHM 59 68 59 66 1 3
LTI 118 143 120 143 -1 -0
LTTS 85 107 84 104 1 2
MTCL 80 95 78 91 3 5
MPHL 76 94 75 92 2 3
COFORGE 107 135 105 130 2 5
PSYS 79 98 79 94 -0 5
ZENT 16 21 16 20 3 3
CYL 43 52 43 51 2 4
Exhibit 9: Expected quarterly performance summary
Sector CMP Sales (INR b) EBIT (INR b) Adjusted net profit (INR b)
(INR) Rating Sep’21 Var. YoY Var. QoQ Sep’21 Var. YoY Var. QoQ Sep’21 Var. YoY Var. QoQ
TCS 3,730 Neutral 472.8 17.8% 4.1% 123.9 17.8% 6.9% 97.9 15.7% 8.4%
INFO 1,665 Buy 293.9 19.6% 5.4% 65.6 5.3% -0.7% 52.9 8.8% 1.6%
WPRO 636 Neutral 191.6 26.8% 5.0% 30.8 9.6% -5.3% 26.8 7.8% -17.3%
HCLT 1,273 Buy 208.1 11.9% 3.7% 39.6 -1.4% 0.7% 31.7 0.4% -2.0%
TECHM 1,371 Neutral 106.1 13.2% 4.1% 15.7 18.0% 1.6% 12.8 20.5% -6.2%
LTI 5,751 Neutral 36.6 22.2% 5.8% 6.1 2.7% 7.7% 5.2 13.7% 4.6%
LTTS 4,644 Buy 16.0 21.5% 5.1% 2.7 48.9% 2.3% 2.2 34.8% 3.2%
MTCL 4,184 Neutral 24.9 29.3% 8.7% 4.2 30.2% 3.0% 3.4 33.0% -1.8%
MPHL 3,026 Buy 28.1 16.1% 5.2% 4.4 13.2% 4.0% 3.6 19.1% 4.9%
COFORGE 5,279 Neutral 15.8 36.9% 8.0% 2.1 33.7% 26.7% 1.8 44.7% 25.6%
PSYS 3,643 Neutral 13.3 32.1% 8.2% 1.8 45.4% 1.8% 1.6 53.7% -1.2%
ZENT 478 Buy 10.4 10.8% 10.8% 1.1 -21.6% -16.2% 0.8 -7.9% -19.6%
CYL 1,063 Buy 11.1 10.2% 4.5% 1.5 37.1% 9.1% 1.2 45.3% 6.0%
Sector aggregate (INR b) 1,429 18.5% 4.7% 299 11.2% 2.6% 242 11.9% 0.8%
October 2021 4
Exhibit 10: Comparative valuation

EPS Div.
CMP M-cap EPS (INR) P/E (x) RoE (%)
CAGR (%) yield (%)
(INR) (INR b)
Company FY21 FY22E FY23E FY21-23E FY22E FY21 FY22E FY23E FY21 FY22E FY23E
CYL 1063 117 33.8 45.8 54.7 27.2 2.2 31.4 23.2 19.4 13.5 17.0 19.4
HCLT 1273 3460 43.8 48.8 58.5 15.6 2.3 29.1 26.1 21.8 21.0 20.9 23.4
INFO 1665 7060 45.5 51.7 65.1 19.6 2.3 36.6 32.2 25.6 27.3 30.1 38.7
LTI 5751 1000 107.0 123.0 149.8 18.3 0.9 53.7 46.8 38.4 30.5 27.2 28.0
LTTS 4644 485 62.8 88.5 115.5 35.6 0.6 73.9 52.5 40.2 21.2 24.7 27.3
MTCL 4184 689 67.4 88.9 109.0 27.2 1.0 62.1 47.1 38.4 29.7 31.0 32.0
MPHL 3026 565 64.2 74.2 97.9 23.5 1.5 47.1 40.8 30.9 19.7 20.7 24.9
COFORGE 5279 320 78.8 117.2 154.6 40.0 0.7 67.0 45.1 34.1 19.7 26.2 28.6
PSYS 3643 278 59.0 83.8 104.4 33.1 0.7 61.8 43.5 34.9 17.4 21.2 22.7
TCS 3730 14000 86.7 107.2 126.2 20.7 2.2 43.0 34.8 29.6 38.0 44.6 49.6
TECHM 1371 1320 51.7 60.8 71.9 18.0 2.2 26.5 22.5 19.1 19.5 20.5 21.8
WPRO 636 3620 18.8 20.8 24.9 15.2 2.8 33.9 30.6 25.6 19.4 20.9 24.7
ZENT 478 108 15.3 16.6 23.0 22.7 1.1 31.3 28.7 20.8 15.5 15.1 18.7
October 2021 5
The tables below provide a snapshot of actual and estimated numbers for IT companies under the MOFSL coverage universe.
Highlighted columns indicate the quarter/financial year under review.
Coforge Neutral
CMP INR5279| TP: INR5410 (2%) EPS CHANGE (%): FY22|23: 0.2|0.6
 Expect revenue growth momentum to continue in 2QFY22.  Expect one-month revenue accretion (USD8m) from
Expect 3QFY22 to be strong, despite seasonal weakness. integration of SLK integration.
 Expect strong deal wins in 2QFY22, which should result in a  Expect 200bp margin improvement, led by ramp up of
robust performance in 3QFY22. large deals, reversal of travel discounts, and ramp up of
high margin product deal (Advantage Go).
Quarterly performance (Ind AS)
Y/E March FY21 FY22 FY21 FY22E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Rev. (USD m) 140 155 161 172 200 213 222 231 628 866
QoQ (%) -9.4 10.2 4.1 7.2 15.8 6.8 4.3 3.8 5.9 37.9
Revenue (INR m) 10,570 11,537 11,906 12,615 14,616 15,791 16,445 17,186 46,628 64,038
YoY (%) 10.1 11.1 10.9 13.7 38.3 36.9 38.1 36.2 11.5 37.3
GPM (%) 31.5 32.6 32.0 32.0 29.9 32.0 32.5 34.4 32.0 32.3
SGA (%) 14.4 13.8 14.0 14.0 13.7 13.8 13.5 13.5 14.0 13.6
EBITDA (INR m) 1,686 2,048 2,009 2,168 2,200 2,740 2,985 3,446 7,911 11,370
EBITDA Margin (%) 16.0 17.8 16.9 17.2 15.1 17.4 18.2 20.1 17.0 17.8
EBIT (INR m) 1,221 1,588 1,547 1,719 1,676 2,124 2,343 2,776 6,075 8,919
EBIT Margin (%) 11.6 13.8 13.0 13.6 11.5 13.5 14.3 16.2 13.0 13.9
Other income 48 -63 19 109 52 158 164 172 113 546
ETR (%) 20.5 19.9 21.1 22.3 18.5 22.5 22.5 22.5 21.0 21.8
Minority Interest -30.0 -15.0 -15.0 -44.0 -76.0 -74.1 -74.0 -74.5 -104.0 -298.6
Adj. PAT 979 1,207 1,220 1,376 1,332 1,694 1,870 2,210 4,782 7,106
QoQ (%) -22.5 23.3 1.1 12.8 -3.2 27.2 10.3 18.2
YoY (%) -4.2 1.0 -1.1 8.9 36.1 40.4 53.2 60.6 1.4 48.6
Adj. EPS (INR) 15.7 19.9 20.1 22.7 22.0 27.9 30.8 36.4 78.8 117.2
Cyient Buy
CMP INR1063 | TP: INR1260 (+19%) EPS CHANGE (%): FY22|23: 1.7|0.5
 Expect strong growth (~5.5% QoQ) in Services revenue,  Expect moderate growth in the DLM business in 2QFY22.
led by broad based growth across verticals. However, 2HFY22 is expected to be strong for the DLM
business.
 Expect DLM deal wins to be better than Services.  Expect margin expansion on better business mix.
Quarterly performance
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Revenue (USD m) 131 135 141 150 144 149 158 167 557 618
QoQ (%) -12.5 3.4 4.7 6.0 -4.3 4.0 6.1 5.4 -10.9 11.0
Revenue (INR m) 9,917 10,033 10,443 10,932 10,582 11,057 11,721 12,439 41,325 45,799
YoY (%) -8.9 -13.4 -5.6 1.8 6.7 10.2 12.2 13.8 -6.7 10.8
GPM (%) 30.5 35.7 34.6 36.0 35.9 36.4 36.8 36.5 34.3 36.4
SGA (%) 20.5 19.9 18.8 18.9 18.2 18.2 18.6 18.5 19.5 18.4
EBITDA 995 1,589 1,650 1,873 1,878 2,012 2,133 2,239 6,107 8,263
EBITDA Margin (%) 10.0 15.8 15.8 17.1 17.7 18.2 18.2 18.0 14.8 18.0
EBIT 511 1,105 1,165 1,382 1,388 1,515 1,606 1,679 4,163 6,188
EBIT Margin (%) 5.2 11.0 11.2 12.6 13.1 13.7 13.7 13.5 10.1 13.5
Other income 575 -14 83 40 147 111 117 124 684 499
ETR (%) 25.0 23.1 23.6 22.2 25.1 25.0 25.0 25.0 23.4 25.0
Adj. PAT 814 839 954 1,107 1,150 1,219 1,293 1,353 3,714 5,015
QoQ (%) 8.1 3.1 13.7 16.0 3.9 6.0 6.0 4.7
YoY (%) -9.9 -14.9 -11.9 47.0 41.3 45.3 35.5 22.3 -0.3 35.0
EPS (INR) 7.4 7.6 8.7 10.1 10.5 11.1 11.8 12.4 33.8 45.8
October 2021 6
HCL Technologies Buy

CMP INR1273| TP: INR1460 (+15%) EPS CHANGE (%): FY22|23: -0.9|-0.8
 Expect margin in 2QFY22 to be impacted by wage hike,
 2QFY22 will see good sequential catch-up, with ~3.3%
with 75-100bp impact. HCLT will also see headwinds from
QoQ reported growth.
retention and skill allowance. This implies some margin
 Revenue guidance implies a 2.8% CQGR over 2Q-4QFY22.
drag v/s 1QFY22, despite adjusting for 90bp one-off cost
Improved clarity on guidance will be a positive step.
in 1Q.
Revenue (USD m) 2,356 2,507 2,617 2,696 2,720 2,808 2,885 2,955 10,175 11,368
QoQ (%) -7.4 6.4 4.4 3.0 0.9 3.3 2.7 2.4 2.4 11.7
Revenue (INR b) 178 186 193 196 201 208 214 220 754 842
YoY (%) 8.6 6.1 6.4 5.7 12.5 11.9 10.6 12.1 6.7 11.8
GPM (%) 39.9 41.2 42.0 36.5 39.2 38.3 38.8 40.0 39.9 39.1
SGA (%) 12.4 12.7 12.0 12.6 12.8 12.6 12.8 12.8 12.4 12.7
EBITDA 46 50 54 44 49 50 52 56 193 207
EBITDA Margin (%) 25.6 26.6 28.2 22.2 24.5 23.9 24.3 25.5 25.6 24.5
EBIT 37 40 44 33 39 40 41 45 153 166
EBIT Margin (%) 20.5 21.6 22.9 16.6 19.6 19.0 19.4 20.6 20.4 19.7
Other income 2 1 1 2 2 2 2 2 7 8
ETR (%) 24.0 24.1 24.1 30.2 21.7 24.0 24.0 24.0 25.4 23.4
Adjusted PAT 29 31 34 24 32 31 33 36 119 133
QoQ (%) -7.3 7.5 9.2 -30.5 34.7 -2.0 4.4 9.4
YoY (%) 31.7 18.5 13.0 -24.3 10.0 0.3 -4.2 50.7 7.4 11.5
EPS 10.8 11.6 12.6 8.8 11.8 11.6 12.1 13.3 43.8 48.8
Infosys Buy
 Expect strong revenue growth led by a ramp up in large  Expect impact on margin on account of wage hike and
deals (Daimler deal ramp up). supply-side challenges.
 Expect momentum in large deal wins to continue.  Expect FY22 revenue growth guidance to be revised
upwards. Demand commentary to be closely watched.
Quarterly performance (IFRS)
Revenue (USD m) 3,121 3,312 3,516 3,613 3,782 3,966 4,068 4,219 13,562 16,035
QoQ (%) -2.4 6.1 6.2 2.8 4.7 4.9 2.5 3.7 6.1 18.2
Revenue (INR m) 237 246 259 263 279 294 301 314 1,005 1,188
YoY (%) 8.5 8.6 12.3 13.1 17.9 19.6 16.1 19.5 10.7 18.3
GPM (%) 33.6 35.8 35.3 34.8 33.7 32.6 33.7 33.9 34.9 33.5
SGA (%) 10.9 10.5 9.9 10.3 10.0 10.3 10.6 10.3 10.4 10.3
EBITDA 61 71 74 73 74 74 79 84 279 311
EBITDA Margin (%) 25.9 28.8 28.6 27.6 26.6 25.3 26.1 26.6 27.8 26.2
EBIT 54 62 66 64 66 66 70 74 246 275
EBIT Margin (%) 22.7 25.3 25.4 24.5 23.7 22.3 23.1 23.6 24.5 23.2
Other income 4 5 6 5 6 6 6 6 20 24
ETR (%) 26.2 28.0 27.1 26.8 27.5 26.0 26.0 26.0 27.0 26.4
PAT 42 48 52 51 52 53 56 59 194 220
QoQ (%) -1.7 14.0 7.3 -2.3 2.3 1.5 5.8 6.5
YoY (%) 11.9 20.6 16.6 17.5 22.3 8.9 7.4 17.1 16.7 13.6
EPS (INR) 10.0 11.4 12.2 11.9 12.2 12.4 13.1 14.0 45.5 51.7
October 2021 7
LTI Neutral
CMP INR5751| TP: INR5390 (-6%) EPS CHANGE (%): FY22|23: 1.5|1.4
 Demand is strong and revenue growth momentum in  Manufacturing vertical will witness seasonally strong
1QFY22 will continue in 2Q, led by broad based growth 2HFY22.
across verticals.
 Expect margin to be up 30bp QoQ as benefits from  Commentary around deal pipeline and wins remains a key
revenue growth will be offset by strong hiring and lower monitorable.
utilization.
Revenue (USD m) 390 405 428 447 470 494 514 533 1,670 2,012
QoQ (%) -4.8 3.6 5.8 4.6 5.1 5.2 4.0 3.5 9.5 20.5
Revenue (INR m) 29,492 29,984 31,528 32,694 34,625 36,639 38,062 39,406 1,23,698 1,48,732
YoY (%) 18.7 16.6 12.2 8.5 17.4 22.2 20.7 20.5 13.7 20.2
GPM (%) 32.5 34.8 35.0 32.0 31.0 30.9 31.5 32.1 33.6 31.4
SGA (%) 12.4 12.0 11.7 10.1 12.3 11.9 12.0 12.0 11.5 12.0
EBITDA 5,920 6,856 7,320 7,155 6,478 6,961 7,422 7,913 27,251 28,774
EBITDA Margin (%) 20.1 22.9 23.2 21.9 18.7 19.0 19.5 20.1 22.0 19.3
EBIT 5,139 5,957 6,501 6,329 5,682 6,120 6,548 7,008 23,926 25,360
EBIT Margin (%) 17.4 19.9 20.6 19.4 16.4 16.7 17.2 17.8 19.3 17.1
Other income 450 174 492 268 1,039 806 837 867 1,384 3,549
ETR (%) 25.5 25.5 25.8 25.9 26.1 25.0 25.0 25.0 25.7 25.3
Adj. PAT 4,164 4,568 5,192 4,886 4,968 5,195 5,539 5,906 18,810 21,608
QoQ (%) -2.6 9.7 13.7 -5.9 1.7 4.6 6.6 6.6
YoY (%) 17.1 26.8 37.8 14.3 19.3 13.7 6.7 20.9 23.7 14.9
EPS (INR) 23.7 26.0 29.5 31.0 28.3 29.6 31.5 33.6 107.0 123.0
LTTS Buy
CMP INR4644| TP: INR5200 (+12%) EPS CHANGE (%): FY22|23: 0.3|-0.5
 Expect growth across verticals.
 Expect robust demand commentary, with an improvement  Commentary around deal wins and industry outlook
in growth from 3QFY22. remains a key monitorable.
Revenue (USD m) 171 178 190 198 206 215 223 232 737 876
QoQ (%) -12.5 4.1 6.8 3.9 4.2 4.7 3.4 4.2 -6.3 18.9
Revenue (INR m) 12,947 13,138 14,007 14,405 15,184 15,965 16,490 17,291 54,497 64,929
YoY (%) -3.9 -6.3 -1.6 -0.4 17.3 21.5 17.7 20.0 -3.0 19.1
GPM (%) 26.8 30.1 30.8 32.3 33.4 32.7 33.0 33.4 30.1 33.1
SGA (%) 10.9 12.4 11.1 11.9 12.4 12.3 11.8 11.8 11.6 12.1
EBITDA 2,059 2,328 2,756 2,931 3,177 3,257 3,496 3,734 10,074 13,664
EBITDA Margin (%) 15.9 17.7 19.7 20.3 20.9 20.4 21.2 21.6 18.5 21.0
EBIT 1,567 1,801 2,132 2,391 2,623 2,682 2,902 3,112 7,891 11,319
EBIT Margin (%) 12.1 13.7 15.2 16.6 17.3 16.8 17.6 18.0 14.5 17.4
Other income 30 457 374 221 334 335 346 363 1,082 1,379
ETR (%) 26.0 26.4 25.4 25.2 26.6 26.0 26.0 26.0 25.7 26.1
PAT 1,173 1,655 1,861 1,945 2,162 2,231 2,402 2,569 6,634 9,364
QoQ (%) -42.7 41.1 12.4 4.5 11.2 3.2 7.7 7.0
YoY (%) -42.4 -19.6 -8.8 -5.0 84.3 34.8 29.1 32.1 -19.0 41.2
EPS (INR) 11.1 15.7 17.6 18.4 20.4 21.1 22.7 24.3 62.8 88.5
October 2021 8
Mindtree Neutral
CMP INR4184 | TP: INR4150 (-1%) EPS CHANGE (%): FY22|23: 6.4|8.2
 Expect strong growth across all verticals led by RCM and  Expect top clients to continue to grow. Expect growth in 2-
CMT. Expect growth momentum in BFSI and Travel to 10 client groups as well.
continue.
 Expect deal wins to increase YoY.  Outlook on deal wins, top client, and margin is a key
monitorable.
Revenue (USD m) 253 261 274 288 311 336 347 362 1,077 1,355
QoQ (%) -9.1 3.1 5.0 5.1 7.7 8.3 3.1 4.4 -1.1 25.9
Revenue (INR m) 19,088 19,260 20,237 21,093 22,917 24,913 25,660 26,958 79,678 1,00,447
YoY (%) 4.1 0.6 3.0 2.9 20.1 29.3 26.8 27.8 2.6 26.1
GPM (%) 26.3 27.5 30.6 29.9 29.0 27.9 28.6 31.0 28.6 29.2
SGA (%) 8.1 7.9 7.5 7.9 8.8 8.6 8.4 8.3 7.8 8.5
EBITDA (INR m) 3,478 3,784 4,679 4,626 4,645 4,808 5,183 6,108 16,567 20,744
EBITDA Margin (%) 18.2 19.6 23.1 21.9 20.3 19.3 20.2 22.7 20.8 20.7
EBIT (INR m) 2,881 3,215 3,962 3,913 4,063 4,185 4,465 5,353 13,971 18,066
EBIT Margin (%) 15.1 16.7 19.6 18.6 17.7 16.8 17.4 19.9 17.5 18.0
Other income 17 232 489 275 589 374 385 404 1,013 1,752
ETR (%) 26.5 26.4 26.6 24.2 26.2 26.0 26.0 26.0 25.9 26.0
PAT 2,130 2,537 3,265 3,173 3,434 3,374 3,589 4,261 11,105 14,657
QoQ (%) 3.3 19.1 28.7 -2.8 8.2 -1.8 6.4 18.7
YoY (%) 129.8 87.9 65.7 53.9 61.2 33.0 9.9 34.3 76.0 32.0
EPS (INR) 12.9 15.4 19.8 19.2 20.8 20.5 21.8 25.8 67.4 88.9
Mphasis Buy
CMP INR3026 | TP: INR3530 (+17%) EPS CHANGE (%): FY22|23: -4.5|-1.0
 Expect strong momentum in the Direct business  Expect decline to continue in DXC, the extent may be
(~6.8% CC). USD3-4m sequentially.
 Expect flattish margin and strong employee  Outlook and clarity regarding MRC with DXC is a key
addition. monitorable
 Expect deal wins to be ~USD250m.
Revenue (USD m) 305 327 334 342 363 380 397 410 1,309 1,550
QoQ (%) -4.5 7.2 2.0 2.5 6.0 4.6 4.7 3.1 5.6 18.4
Revenue (INR m) 22,882 24,354 24,743 25,243 26,909 28,137 29,409 30,335 97,222 1,14,790
YoY (%) 10.9 12.8 8.7 7.6 17.6 15.5 18.9 20.2 9.9 18.1
GPM (%) 28.9 30.3 31.0 31.0 28.4 29.1 30.0 29.3 30.3 29.2
SGA (%) 10.7 11.7 12.2 12.5 10.2 11.0 11.8 11.8 11.8 11.2
EBITDA 4,178 4,524 4,654 4,671 4,895 5,093 5,352 5,297 18,027 20,638
EBITDA Margin (%) 18.3 18.6 18.8 18.5 18.2 18.1 18.2 17.5 18.5 18.0
EBIT 3,583 3,924 4,048 4,054 4,271 4,440 4,529 4,448 15,609 17,688
EBIT Margin (%) 15.7 16.1 16.4 16.1 15.9 15.8 15.4 14.7 16.1 15.4
Other income 182 114 218 182 310 310 265 243 696 1,127
ETR (%) 27.0 25.9 23.7 25.2 25.8 25.0 25.0 25.0 25.4 25.2
PAT 2,750 2,992 3,255 3,169 3,397 3,562 3,595 3,518 12,166 14,073
QoQ (%) -22.0 8.8 8.8 -2.6 7.2 4.9 0.9 -2.1
YoY (%) 3.7 9.3 10.2 -10.1 23.5 19.1 10.5 11.0 2.5 15.7
EPS (INR) 14.6 15.9 17.2 16.7 17.9 18.8 19.0 18.6 64.2 74.2
October 2021 9
Persistent Systems Neutral

CMP INR3643 | TP: INR3550 (-3%) EPS CHANGE (%): FY22|23: -0.2|0.2
 Expect strong sequential growth in 2QFY22 led by solid  Expect deal wins to be flat/slightly lower QoQ.
performance in Services.
 Expect some impact in margin on wage hike, partially  Medium term growth and margin outlook will be the key
offset by strong growth and the absence of one-time cost. monitorable.

(Consolidated) 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Revenue (USD m) 131.0 136.1 146.2 152.8 166.8 179.7 190.1 199.3 566 736
QoQ (%) 3.1 3.9 7.4 4.6 9.2 7.7 5.8 4.8 12.9 30.0
Revenue (INR m) 9,914 10,077 10,754 11,134 12,299 13,314 14,066 14,846 41,879 54,525
QoQ (%) 7.0 1.7 6.7 3.5 10.5 8.2 5.6 5.5
YoY (%) 19.1 13.9 16.5 20.2 24.1 32.1 30.8 33.3 17.4 30.2
GPM (%) 33.0 34.7 34.3 33.9 33.5 33.0 33.2 33.8 34.0 33.4
SGA (%) 18.2 18.3 17.3 17.0 16.6 16.7 16.6 16.8 17.7 16.7
EBITDA 1,464 1,658 1,825 1,883 2,090 2,170 2,335 2,524 6,830 9,119
EBITDA Margin (%) 14.8 16.4 17.0 16.9 17.0 16.3 16.6 17.0 16.3 16.7
EBIT 1,029 1,218 1,364 1,464 1,740 1,771 1,814 1,975 5,075 7,299
EBIT Margin (%) 10.4 12.1 12.7 13.2 14.1 13.3 12.9 13.3 12.1 13.4
Other income 192 157 286 385 365 333 281 297 1,020 1,276
ETR (%) 26.2 25.8 26.7 25.5 24.6 25.5 25.5 25.5 26.1 25.3
PAT 900 1,020 1,209 1,378 1,587 1,567 1,561 1,692 4,507 6,408
QoQ (%) 7.4 13.3 18.6 13.9 15.2 -1.2 -0.4 8.4
YoY (%) 9.1 18.5 37.5 64.3 76.3 53.7 29.1 22.8 32.4 42.2
EPS (INR) 11.8 13.3 15.8 18.0 19.8 20.5 20.4 22.1 59.0 83.8
TCS Neutral
CMP INR3730 | TP: INR3,790 (+2%) EPS CHANGE (%): FY22|23: 0|0.4
 Expect strong growth led by bounce back in the India  Expect sequential expansion in margin led by SG&A
business and ramp of deal wins in the 1QFY22. leverage.
 Expect reporting of robust TCV led by continued  Commentary around near term and longer term growth
momentum in deal wins. outlook would be in focus.

IT Services Revenue (USD m) 5,059 5,424 5,702 5,989 6,154 6,380 6,493 6,691 22,174 25,719
QoQ (%) -7.1 7.2 5.1 5.0 2.8 3.7 1.8 3.0 0.6 16.0
Overall Revenue (INR b) 383 401 420 437 454 473 481 498 1,642 1,906
QoQ (%) -4.1 4.7 4.7 4.0 3.9 4.1 1.6 3.7
YoY (%) 0.4 3.0 5.4 9.4 18.5 17.8 14.4 14.1 4.6 16.1
GPM (%) 39.4 40.9 41.6 41.2 40.4 40.8 41.2 41.7 40.8 41.0
SGA (%) 15.8 14.7 15.0 14.4 14.8 14.6 14.6 14.8 15.0 14.7
EBITDA 100 115 122 128 127 134 138 145 465 544
EBITDA Margin (%) 26.2 28.7 29.1 29.3 27.9 28.4 28.8 29.1 28.4 28.6
EBIT 90 105 112 117 116 124 128 134 425 502
EBIT Margin (%) 23.6 26.2 26.6 26.8 25.5 26.2 26.6 26.9 25.9 26.3
Other income 5 7 5 8 6 7 8 8 25 29
PBT 95 113 117 125 122 130 136 143 450 531
ETR (%) 25.8 24.8 25.4 25.9 25.8 25.0 25.0 25.0 25.5 25.2
Adj. PAT 70 85 87 93 90 98 102 107 335 397
Exceptional items 0 -10 0 0 0 0 0 0 -10 0
Reported PAT 70 75 87 93 90 98 102 107 326 397
QoQ (%) -12.9 6.5 16.3 6.4 -2.7 8.4 4.2 5.0
YoY (%) -13.5 -6.9 7.2 14.7 32.6 33.4 19.6 19.2 0.4 25.5
EPS (INR) 18.7 19.9 23.2 25.0 25.2 27.0 28.1 29.8 86.7 110.0
October 2021 10
Tech Mahindra Neutral

CMP INR1371 | TP: INR1440 (+5%) EPS CHANGE (%): FY22|23: -0.3|0.3
 Expect 3.5% CC growth led by growth within both  Deal momentum to remain encouraging at USD500-700m.
Communications and Enterprise.
 Margin to be impacted by hiring, higher sub-contracting  Outlook on a recovery in the Telecom vertical a key
cost, and retention cost. monitorable.
Revenue (USD m) 1,208 1,265 1,309 1,330 1,384 1,432 1,455 1,501 5,111 5,771
QoQ (%) -6.7 4.8 3.4 1.6 4.1 3.5 1.6 3.2 -1.4 12.9
Revenue (INR b) 91 94 96 97 102 106 108 112 379 428
YoY (%) 5.2 3.3 -0.1 2.5 12.0 13.2 11.6 14.9 2.7 12.9
GPM (%) 28.5 31.4 32.9 33.7 31.7 31.5 32.2 33.0 31.7 32.1
SGA (%) 14.2 13.3 13.3 13.7 13.3 13.3 13.5 13.7 13.6 13.4
EBITDA 13 17 19 19 19 19 20 22 68 80
EBITDA Margin (%) 14.3 18.2 19.6 20.0 18.4 18.2 18.7 19.3 18.1 18.7
EBIT 9 13 15 16 15 16 16 18 54 65
EBIT Margin (%) 10.1 14.2 15.9 16.5 15.2 14.8 15.3 15.9 14.2 15.3
Other income 4 1 2 0 2 1 2 2 6 7
ETR (%) 25.5 24.6 24.8 26.4 23.9 25.5 25.5 25.5 25.3 25.1
Adj. PAT 10 11 13 12 14 13 13 14 46 54
QoQ (%) -4.8 9.5 23.0 -7.5 11.7 -6.3 4.6 7.5
YoY (%) 1.3 -5.3 14.3 18.6 39.2 19.1 1.3 17.7 7.2 17.9
Reported PAT 10 11 13 11 14 13 13 14 44 54
EPS (INR) 11.1 12.1 14.9 12.3 15.3 14.4 15.0 16.1 51.7 60.8
Wipro Neutral
CMP INR636 | TP: INR650 (2%) EPS CHANGE (%): FY22|23: -0.3|-1.1
 Expect revenue growth to be at mid-point of its 5-7% QoQ  3QFY22 guidance and deal wins would be key focus areas.
guidance.
 Margin will be impacted by a reversal of one-off tailwind,
wage hike for 80% of employees (one-month impact), inch
up in discretionary costs, and higher amortization from
the Capco integration.
IT Services Revenue (USD m) 1,922 1,992 2,071 2,152 2,415 2,566 2,625 2,686 8,137 10,292
QoQ (%) -7.3 3.7 3.9 3.9 12.2 6.3 2.3 2.3 -1.4 26.5
Overall Revenue (INR b) 149 151 157 162 183 192 196 202 619 771
QoQ (%) -5.1 1.4 3.7 3.7 12.4 5.0 2.1 3.1
YoY (%) 1.3 -0.1 1.3 3.4 22.4 26.8 24.8 24.1 1.5 24.5
GPM (%) 30.5 30.3 33.4 32.4 30.1 29.4 30.0 30.0 31.7 29.9
SGA (%) 13.3 11.8 12.2 11.9 12.9 13.5 13.5 13.5 12.3 13.4
EBITDA 33 35 42 41 41 39 41 43 151 164
EBITDA Margin (%) 22.1 23.0 26.6 25.3 22.4 20.6 21.2 21.1 24.3 21.3
IT Serv. EBIT (%) 19.1 19.2 21.7 21.0 17.8 16.1 16.6 16.6 20.3 16.8
EBIT Margin (%) 18.0 18.6 21.6 21.0 17.8 16.1 16.7 16.7 19.8 16.8
Other income 4 4 5 3 6 4 4 4 16 17
ETR (%) 22.1 22.5 22.1 20.7 16.1 22.5 22.5 22.5 21.8 20.8
PAT 24 25 30 30 32 27 28 29 108 116
QoQ (%) 2.8 3.2 20.3 0.2 8.7 -17.6 5.2 2.8
YoY (%) 3.5 -3.4 20.8 27.8 35.2 8.0 -5.6 -3.1 11.0 7.2
EPS (INR) 4.2 4.3 5.2 5.4 5.9 4.9 5.1 5.3 18.8 20.8
October 2021 11
Zensar Technologies Buy

 Organic growth momentum in 1QFY22 is expected to  Expect a strong deal win momentum led by large deal
continue in 2Q. On an overall basis, we expect double- closures (City of San Diego).
digit sequential growth in 2QFY22.
 Margin to be impacted by 350bp QoQ led by wage hike,  Outlook on medium term growth and margin will be
sales, and operating investments. a key monitorable.
Revenue (USD m) 125 126 123 120 127 140 146 153 494 566
QoQ (%) -7.2 0.5 -2.4 -2.1 5.8 10.1 4.3 4.7 -12.7 14.6
Revenue (INR m) 9,485 9,364 9,065 8,767 9,368 10,380 10,808 11,395 36,681 41,951
YoY (%) -7.4 -8.9 -7.7 -10.2 -1.2 10.8 19.2 30.0 -8.5 14.4
GPM (%) 29.6 34.8 34.6 34.9 34.8 31.7 32.2 33.9 33.4 33.1
SGA (%) 14.6 15.4 14.1 15.0 16.4 16.7 16.7 16.7 14.8 16.6
EBITDA 1,418 1,818 1,863 1,743 1,726 1,557 1,675 1,960 6,842 6,918
EBITDA Margin (%) 14.9 19.4 20.6 19.9 18.4 15.0 15.5 17.2 18.7 16.5
EBIT 979 1,390 1,442 1,298 1,300 1,090 1,189 1,447 5,109 5,026
EBIT Margin (%) 10.3 14.8 15.9 14.8 13.9 10.5 11.0 12.7 13.9 12.0
Other income 28 -171 -82 -56 95 10 11 11 -281 128
ETR (%) 26.2 26.5 26.5 25.3 26.5 25.0 25.0 25.0 26.1 25.4
Adj. PAT 727 878 987 905 1,010 810 885 1,079 3,497 3,784
QoQ (%) 2.6 20.7 12.3 -8.3 11.6 -19.8 9.2 21.9
YoY (%) -6.8 16.1 157.9 27.6 38.9 -7.7 -10.3 19.2 33.0 8.2
EPS (INR) 3.2 3.9 4.3 3.9 4.4 3.6 3.9 4.7 15.3 16.6
October 2021 12
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October 2021 13
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.
CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel
No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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September 2021 Results Preview | Sector: Technology

Research Analyst: Mukul Garg (Mukul.Garg@MotilalOswal.com)

Exhibit 2: Expect Tier II revenue (USD) to grow by ~5% QoQ

Exhibit 4: 2QFY22 currency highlights (INR)

Exhibit 5: 2QFY22 currency highlights (USD)

Source: Bloomberg, MOFSL Source: Bloomberg, MOFSL

Exhibit 10: Comparative valuation

HCL Technologies Buy

Persistent Systems Neutral

Quarterly performance (IFRS)

Quarterly performance (IFRS)

Tech Mahindra Neutral

Zensar Technologies Buy

In the past 12 months , MOFSL or any of its associates may have:

Terms & Conditions:

Disclosure of Interest Statement Companies where there is interest

Regional Disclosures (outside India)

For Hong Kong:

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