Stock Analysis & Valuation NTT DATA Corporation (9613.T)

• Previous Close: ¥3,965.00
• Sector Valuation Confidence Level: Low

Valuation method	Value, ¥	Upside, %
Artificial intelligence (AI)	409333321632.64	10323665011
Intrinsic value (DCF)	409333320993.57	10323664994
Graham-Dodd Method	489.81	-88
Graham Formula	1428.63	-64

Strategic Investment Analysis

Company Overview

NTT DATA Corporation (9613.T) is a global leader in IT and business services, operating as a subsidiary of Nippon Telegraph and Telephone Corporation (NTT). Headquartered in Tokyo, Japan, the company provides a comprehensive suite of services, including cloud computing, cybersecurity, data intelligence, application development, and business process consulting. NTT DATA serves diverse industries such as government, healthcare, finance, manufacturing, and telecommunications, leveraging its deep industry expertise and technological innovation. With a strong presence in North America, EMEA, and LATAM, the company is a key player in digital transformation, helping clients optimize operations and drive growth. NTT DATA's robust financial performance, backed by its parent company's resources, positions it as a trusted partner in the rapidly evolving IT services sector. The company's commitment to sustainability and cutting-edge solutions ensures long-term relevance in the global technology landscape.

Investment Summary

NTT DATA Corporation presents a compelling investment opportunity due to its strong market position, diversified service offerings, and backing by NTT Group. The company's revenue of ¥4.37 trillion (FY 2024) and net income of ¥133.9 billion reflect steady growth and operational efficiency. With a beta of 0.514, NTT DATA offers lower volatility compared to the broader market, appealing to risk-averse investors. However, high total debt (¥2.45 trillion) and significant capital expenditures (¥-654.5 billion) could pressure cash flows. The dividend yield, at ¥25 per share, is modest but stable. Investors should weigh the company's global expansion and technological capabilities against macroeconomic risks in the IT services sector.

Competitive Analysis

NTT DATA Corporation competes in the highly fragmented IT services market, where differentiation is driven by technological expertise, global reach, and industry specialization. The company benefits from its affiliation with NTT Group, providing financial stability and access to cutting-edge R&D. Its diversified portfolio, spanning cloud, cybersecurity, and data intelligence, allows it to serve a broad client base, reducing dependency on any single industry. However, competition is intense, with global giants like Accenture and IBM dominating high-margin consulting segments, while Indian firms like TCS and Infosys offer cost advantages in outsourcing. NTT DATA's strength lies in its hybrid model—combining Japanese precision with global scalability—but it faces challenges in matching the agility of smaller, niche players. The company's focus on digital transformation and sustainability aligns with market trends, but execution risks remain, particularly in integrating acquisitions and maintaining profitability amid rising labor costs.

Major Competitors

• Accenture plc (ACN): Accenture is a global leader in IT services and consulting, with superior brand recognition and higher margins than NTT DATA. Its strength lies in strategic advisory and digital transformation, but it lacks the deep infrastructure support NTT DATA derives from NTT Group. Accenture's higher pricing may limit competitiveness in cost-sensitive markets.
• International Business Machines Corporation (IBM): IBM excels in enterprise software and AI (Watson), but its legacy hardware business drags growth. NTT DATA outperforms IBM in agile IT services and regional customization, especially in Asia. IBM's R&D budget is larger, but NTT DATA's integration with NTT's telecom infrastructure provides unique synergies.
• Tata Consultancy Services Limited (TCS.NS): TCS is a low-cost leader with massive scale in outsourcing, posing a threat to NTT DATA's cost-sensitive clients. However, NTT DATA's expertise in high-value domains like cybersecurity and its strong Japanese domestic market balance this disadvantage. TCS struggles with differentiation beyond cost.
• Infosys Limited (INFY): Infosys competes closely with NTT DATA in digital services and cloud, but its reliance on North American markets makes it vulnerable to geopolitical shifts. NTT DATA's diversified geographic footprint and public-sector contracts in Japan provide more stability.
• Cognizant Technology Solutions Corporation (CTSH): Cognizant's strong healthcare and financial services verticals overlap with NTT DATA's focus areas. While Cognizant is more aggressive in M&A, NTT DATA's backing by NTT offers stronger balance-sheet flexibility for long-term investments.