TCOM Data reported healthy growth in revenue, through increased traction for its connectivity solutions. EBITDA increased QoQ by 20% on cost savings (Structural and COVID-19-related). However, once the situation is normal, COVID-related savings should be moderate. After the positive change in EBITDA in FY20, Growth Services continued to grow in profitability, while the Innovation Services segment continued to pull performance, although the loss was small. TCOM recorded strong order flows – the highest in the last two years. The strategic transition from product player to an integrated solutions provider is greatly enhanced for TCOM. The firm’s growth platforms/pillars are well defined, with financial targets of double-digit EBITDA growth and 20% RoCE over 3 years, along with debt reduction.
OUTLOOK
Management performance in GDS is strong and management is confident in revenue growth. We estimate the EBITDA CAGR to be 11% and Rs 55 billion higher than the FC21 generation FY21-23E. We will resume coverage with purchase rating and SoTP-based TP at Rs.950.
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