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TCOM marked by positive surprise on margins front, ICICI Securities

Q1FY23 Results: TCOM performance was marked by positive surprise on margins front and strong cash flow generation.

  • Topline came in at | 4311 crore, up 5.1% YoY & up 1.1% QoQ, with data revenues up ~7.6% YoY (up 1.2% QoQ) at | 3340 crore.
  • EBITDA margin was at 25% (up 95 bps YoY and up 47 bps QoQ), possibly owing to some benefit of US$ appreciation. Data EBITDA margin was at 29%, down 30 bps QoQ. The company reported a PAT of | 544 crore, up 83.6% YoY, aided by higher other income (the majority of which included tax refunds and interest on the same) and lower depreciation and interest costs. There was also sequential decline in net debt by ~| 812 crore QoQ on the back of a healthy FCF.

Key triggers for future price performance

  • Growth will be driven by platforms viz. a) cloud, edge & security b) next generation connectivity c) NetFoundry d) MOVE & IoT, wherein each having robust market size growth potential of 15-25% CAGR over the next 4-5 years
  • We expect ~9.4% revenue CAGR in FY22-24E in the overall data segment, driven by likely acceleration in growth from H2FY23 onwards. We expect overall margins to be at 25% in FY24 vs. 25.3% in FY22, with some weakness likely in FY23. Strong cash flows generation to aid deleveraging.

For report –

CT Bureau

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