Breaking Down NTT DATA Corporation Financial Health: Key Insights for Investors

Curious whether NTT DATA Corporation (9613.T) is a buy, hold or watch? This deep-dive peels back the headlines with hard numbers: Q1 net sales of ¥1,104.4 billion (down 0.7% YoY) versus trailing twelve‑month revenue of ¥4.63 trillion and FY Mar 31, 2025 annual revenue of ¥4.64 trillion (up 6.21% YoY), a market cap of ¥5.56 trillion, and analyst models forecasting ¥4.88 trillion for 2026 (+6.0%); profitability shows Q1 operating profit of ¥57.79 billion (operating margin ~5.23%), EPS of ¥15.04 with a projected FY2026 EPS of ¥134 (+28%), and returns of ROE 4.83% and ROIC 3.57%; balance sheet and liquidity flags include a debt-to-equity of 0.99, debt-to-EBITDA 4.12x, interest coverage 3.07, current ratio 0.96 and quick ratio 0.76 alongside S&P's downgrade to A- and removal from the Nikkei 225-while valuation and cash flow metrics reveal EV/EBITDA 12.79, EV/EBIT 27.03, EV/sales 1.91, EV/FCF -41.37 and a 12‑month analyst price target average of ¥3,442.50 (range ¥3,100-¥4,000); growth levers include strategic alliances with Microsoft and AWS, an order backlog up ¥1,029.5 billion to ¥7,103.6 billion, a workforce of 197,777 (revenue per employee ~¥23.42 million) and analysts' expectations of sustained mid-single-digit sales growth-read on for the line-by-line financials, scenario analysis and what these metrics mean for investors' risk-reward calculus.

NTT DATA Corporation (9613.T) - Revenue Analysis

NTT DATA Corporation (9613.T) reported mixed top-line results across recent reporting periods, with modest quarterly declines offset by full-year growth and positive analyst outlooks. Key metrics and trends below provide a concise view of revenue performance, productivity, market scale, and near-term expectations.

• Q1 (ending June 30, 2025) net sales: ¥1,104.4 billion (down 0.7% year-over-year)
• Trailing twelve months (TTM) revenue: ¥4.63 trillion (up 3.73% YoY)
• Fiscal year (ending March 31, 2025) revenue: ¥4.64 trillion (up 6.21% YoY)
• Analysts' revenue projection for FY2026: ¥4.88 trillion (projected +6.0%)

Interpretation notes (concise): the slight Q1 decline contrasts with solid full-year expansion, suggesting seasonal or contract timing effects in quarterly flows while underlying revenue growth remains positive. Revenue per employee of ¥23.42 million provides a productivity benchmark against peers; combined with a ¥5.56 trillion market cap, investors can assess valuation versus growth trajectory.

• Drivers to monitor: large contract renewals, digital transformation demand, offshore delivery mix, currency impacts.
• Risks to watch: project margin pressure, client budget cycles, geopolitical supply-chain constraints.
• Near-term catalyst: analyst-consensus revenue of ¥4.88 trillion for FY2026.

For context on the company's strategic direction that may influence revenue growth, see Mission Statement, Vision, & Core Values (2026) of NTT DATA Corporation.

NTT DATA Corporation (9613.T) Profitability Metrics

• Operating profit (Q1 FY2025): ¥57.79 billion (-1.4% YoY)
• Net income (Q1 FY2025): ¥21.09 billion (-0.8% YoY)
• Operating profit margin (Q1 FY2025): ~5.23%
• EPS (Q1 FY2025): ¥15.04
• ROE: 4.83%
• ROIC: 3.57%
• Analyst EPS outlook (FY ending Mar 31, 2026): ¥134 (≈ +28% vs current annualized baseline)

• Margin context: a 5.23% operating margin indicates modest profitability relative to peers in IT services; margin stability vs revenue growth will be key to reaching analyst EPS targets.
• ROE/ROIC gap: ROE (4.83%) and ROIC (3.57%) suggest capital returns are modest; improving asset efficiency and margin expansion are necessary to lift shareholder returns.
• EPS trajectory: Q1 EPS of ¥15.04 vs analyst FY2026 ¥134 implies expected material earnings acceleration across remaining quarters or notable one‑time items/earnings drivers.

NTT DATA Corporation (9613.T) - Debt vs. Equity Structure

• Debt-to-Equity Ratio: 0.99 - near parity between debt and equity, indicating a balanced but leverage-aware capital mix.
• Debt-to-EBITDA Ratio: 4.12 - moderate-to-elevated leverage relative to earnings, implying higher sensitivity to EBITDA volatility.
• Interest Coverage Ratio: 3.07 - the company generates roughly three times EBIT relative to interest expense, a workable cushion but below conservative peer thresholds.
• Current Ratio: 0.96 - slightly below the 1.0 benchmark, flagging potential short-term liquidity pressure if working capital needs rise.
• Quick Ratio: 0.76 - indicates limited ability to meet near-term liabilities without relying on inventory conversion.

• Practical investor considerations:
  • Monitor EBITDA trends and free cash flow generation - improvements materially reduce leverage risk.
  • Watch refinancing timelines and interest rate exposures - rising rates could pressure interest coverage.
  • Track working capital management and near-term maturities given current and quick ratios below conservative thresholds.

NTT DATA Corporation (9613.T) Liquidity and Solvency

• Current ratio: 0.96 - slightly below the 1.0 benchmark, indicating current assets are marginally insufficient to cover current liabilities.
• Quick ratio: 0.76 - below 1.0, suggesting limited ability to meet short-term obligations without relying on inventory or less liquid assets.
• Interest coverage ratio: 3.07 - earnings before interest and taxes cover interest expense a little over three times, which is adequate but not comfortably high.
• Debt-to-equity ratio: 0.99 - roughly parity between debt and equity, reflecting a balanced capital structure.
• Debt-to-EBITDA: 4.12 - moderate-to-elevated leverage, raising sensitivity to earnings fluctuations.

• Operational implication: tighter liquidity cushions may constrain flexibility for opportunistic capex or M&A without refinancing.
• Investor implication: monitor EBITDA trends and free cash flow generation, as improvements there would materially reduce leverage ratios.
• Near-term watch items: working capital management, interest expense trajectory, and any debt maturities or refinancing plans.

NTT DATA Corporation (9613.T) - Valuation Analysis

• EV/EBITDA 12.79: implies valuation in line with mature IT services peers rather than a deep-discount growth multiple.
• EV/Sales 1.91 and P/S 1.20: together indicate revenue is being valued moderately; margin improvements would justify higher earnings multiples.
• EV/EBIT 27.03: reflects sensitivity to operating profit-small EBIT swings materially affect valuation.
• EV/FCF -41.37: negative free cash flow is a red flag - may stem from capex, working capital, or one-off items; pushes investors to focus on cash generation recovery.
• Analyst targets (¥3,100-¥4,000) show variance in expectations; the ¥3,442.50 average implies upside from many current market levels.

NTT DATA Corporation (9613.T) - Risk Factors

• Index removal: NTT DATA was removed from the Nikkei 225 Index on July 2, 2025 - a change that can reduce passive fund demand and may temporarily pressure liquidity and market credibility.
• Credit rating pressure: S&P downgraded NTT Corp. to 'A-' in June 2025; broader investor sentiment and cost of capital could be affected.
• Leverage increase: Debt-to-EBITDA is projected to rise from 2.8x to the mid-3x range post-acquisition, indicating a meaningful step-up in financial leverage and covenant/ refinancing risk.
• Short-term liquidity: Current ratio 0.96 and quick ratio 0.76 suggest near-term obligations exceed liquid resources, increasing rollover and working-capital risk.
• Cash-flow strain: EV / Free Cash Flow at -41.37 reflects negative free cash flow on an enterprise-value basis, limiting financial flexibility for capex, dividends, or deleveraging without asset sales or new financing.
• Market valuation dispersion: Analyst 12‑month average price target ¥3,442.50 (range ¥3,100-¥4,000) implies upside from some holders but also notable disagreement among analysts.

• Potential triggers that could exacerbate risk: lower-than-expected post-acquisition synergies, prolonged negative free cash flow, rising interest rates increasing interest burden, or further negative rating/ index actions.
• Mitigants: asset divestitures, equity raises, improved working-capital management, or rapid operational integration could reduce leverage and restore liquidity.

NTT DATA Corporation (9613.T) - Growth Opportunities

• Management sales-growth guidance: 5%-7% CAGR through 2025, targeting roughly ¥3.1 trillion in revenues by 2025.
• Analyst outlook: consensus projects ~6.0% revenue growth for 2026, implying revenues near ¥4.88 trillion in 2026.
• Order backlog: increased by ¥1,029.5 billion to ¥7,103.6 billion, indicating material contracted work and revenue visibility.

• Cloud & AI partnerships - deep alliances with Microsoft and AWS to accelerate cloud migration, managed services, and AI-driven solutions.
• M&A bolstering geography & capabilities - acquisition of Everis (2019) strengthened European and Latin American positions; Everis contributed approximately €500 million to 2022 revenues.
• Market opportunity - North American IT services market opportunity estimated to reach $877 billion by 2027, a major TAM for expansion and higher-margin services.

• Monetize cloud migrations into recurring managed services and platform offerings via Microsoft/AWS co-engineering.
• Cross-sell AI-enabled solutions into existing backlog and large accounts to increase project ARPU and margins.
• Leverage Everis footprint to scale delivery in Europe/Latin America while targeting North America expansion to capture a share of the $877B market.