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PhillipCapital downgrades TDCX Inc to 'accumulate' as it expects tech spending weakness to continue

Felicia Tan
Felicia Tan • 1 min read
PhillipCapital downgrades TDCX Inc to 'accumulate' as it expects tech spending weakness to continue
Laurent Junique, the founder and CEO of TDCX. Photo: Albert Chua/The Edge Singapore
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PhillipCapital analyst Jonathan Woo has downgraded NYSE-listed TDCX Inc to “accumulate” as he expects the pullback in spending by tech companies to continue.

In his report on Jan 31, Woo says he has cut his revenue and patmi forecasts for the FY2023 ending Dec 31 to reflect the continued spending weakness. Woo’s new revenue and patmi for the FY2023 now stands 6% and 5% lower at $765 million and $130 million respectively, which is still up by 15% y-o-y and 20% y-o-y.

In addition, the analyst lowered his target price to US$14.80 ($19.43), down from $15.50 previously. The reduced target price is based on a weighted average cost of capital (WACC) of 10.4% and a terminal growth rate of 3.0%.

Despite the downgrade, Woo notes that the company’s estimated revenue growth for the FY2023 ending Dec 31, at 15% y-o-y, is still the fastest among TDCX’s customer experience (CX) peers with an average of around 8% to 10%.

The company’s adjusted ebitda margins of around 31% are similar to that of its FY2022 levels and in line with the company’s expectations as it expands to other markets.

Shares in TDCX closed US$1.54 lower or 10.81% down at US$12.70.

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