Intrinsic Value NTT DATA Corporation (9613.T)

• Previous Close: ¥3,965.00
• Intrinsic Value: ¥409,333,320,993.57
• Upside potential: +10,323,664,994%

Stock Valuation Context

Business Model And Market Position

NTT DATA Corporation is a global leader in IT and business services, operating across diverse segments including Public & Social Infrastructure, Financial, Enterprise & Solutions, and key geographic regions like North America and EMEA & LATAM. The company delivers a comprehensive suite of services such as cloud computing, cybersecurity, data intelligence, and application development, catering to industries ranging from government and healthcare to finance and manufacturing. As a subsidiary of Nippon Telegraph and Telephone Corporation, NTT DATA leverages its parent company's extensive telecom infrastructure and technological expertise to maintain a competitive edge. Its market position is reinforced by a strong focus on digital transformation, enabling clients to optimize operations through tailored IT solutions. The company’s ability to integrate cutting-edge technologies like AI and IoT into its service offerings positions it as a trusted partner for enterprises navigating complex digital landscapes. With a global footprint and deep industry specialization, NTT DATA is well-equipped to capitalize on the growing demand for IT modernization and outsourcing services.

Revenue Profitability And Efficiency

NTT DATA reported revenue of JPY 4.37 trillion for FY 2024, with net income of JPY 133.9 billion, reflecting a net margin of approximately 3.1%. The company generated JPY 498.8 billion in operating cash flow, though significant capital expenditures of JPY 654.5 billion indicate heavy reinvestment in infrastructure and technology. This balance suggests a focus on long-term growth over short-term profitability.

Earnings Power And Capital Efficiency

The company’s diluted EPS of JPY 95.48 underscores its earnings power, supported by a diversified service portfolio and global client base. However, the high capital expenditures relative to operating cash flow highlight challenges in capital efficiency, as NTT DATA prioritizes expansion and technological upgrades to sustain its competitive position in the IT services sector.

Balance Sheet And Financial Health

NTT DATA maintains a solid liquidity position with JPY 431.8 billion in cash and equivalents, though its total debt of JPY 2.45 trillion raises concerns about leverage. The balance sheet reflects a strategic reliance on debt financing to support growth initiatives, which may necessitate careful monitoring of debt serviceability in fluctuating economic conditions.

Growth Trends And Dividend Policy

The company’s growth is driven by increasing demand for digital transformation services, particularly in cloud and cybersecurity. NTT DATA’s dividend policy, with a payout of JPY 25 per share, indicates a modest but stable return to shareholders, aligning with its reinvestment strategy to fuel future expansion.

Valuation And Market Expectations

With a market capitalization of JPY 5.59 trillion and a beta of 0.514, NTT DATA is perceived as a relatively stable investment within the technology sector. The valuation reflects expectations of steady growth, supported by its entrenched market position and the ongoing global shift toward IT outsourcing and digital solutions.

Strategic Advantages And Outlook

NTT DATA’s strategic advantages include its affiliation with Nippon Telegraph and Telephone Corporation, providing access to cutting-edge telecom infrastructure and R&D capabilities. The outlook remains positive, as the company is well-positioned to benefit from sustained IT spending across industries, though macroeconomic headwinds and competitive pressures could pose challenges.

Sources

Company filings, Bloomberg