- 1Q23 results were in line with expectations. 1Q23 revenue/PATMI at 23%/25% of our FY23e forecasts. Adj. PATMI was at 19% of our FY23e forecasts, negatively impacted by S$5.1mn net reversal in SBC.
- Revenue mix continued to diversify; 76% revenue contribution from top 5 clients (1Q22: 83%). Revenue ex-top 5 clients grew 45% YoY.
- Travel & Hospitality vertical improved 34% YoY as cross-border travel continued to rebound. Increasing outbound China travel expected to be tailwind.
- Long-term tailwinds in the expanding BPO market should continue to benefit TDCX, with the company well-positioned to capture much of this due to its strong presence in Asia. Due to recent share price performance, we upgrade to BUY with an unchanged DCF (WACC 10.4%, g 3%) target price of US$12.10.