Buy Tech Mahindra; target of Rs 778: Firstcall Research

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Buy Tech Mahindra; target of Rs 778: Firstcall Research

Firstcall Research is bullish on Tech Mahindra and has recommended buy rating on the stock with a target of Rs 778 in its June 16, 2011 research report.

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RELATED NEWS Sell India Infoline Fut; tgt of Rs 70: Aditya Birla Money Buy Alstom Projects; target of Rs 590: Aditya Birla Money Buy HPCL; target of Rs 391: IIFL ALSO READ See previous views by Firstcall Research See what other Experts & Brokerages are saying about Tech Mahindra See messages about Tech Mahindra Tech Mahindra BSE | NSE 29/05/12 Are Mutual Funds betting on Tech Mahindra?

Firstcall Research is bullish on Tech Mahindra and has recommended buy rating on the stock with a target of Rs 778 in its June 16, 2011 research report.

"Tech Mahindra limited is a leading provider of IT Solutions to Telecom Industry. It happens to be the Sixth largest IT services Player in India with a core focus on Telecom. • During the quarter ended, the robust growth of Net Sales is increased by 6.61% Rs.12615.30 million. • Tech Mahindra has entered into an alliance with Microsoft Corp. to offer Business Intelligence (BI) solutions for telecom service providers. • Tech Mahindra plans to set up BPO operations in Philippines. • Net Sales and PAT of the company are expected at a CAGR of 9% and 9% over 2010 to 2013E respectively."

"Tech Mahindra Ltd reported a phenomenal rise in consolidated net sales for the quarter ended March 31, 2011. During the quarter, the sales of the company increased 6.61% to Rs 12615.30 million from Rs 11832.90 million in the same quarter previous year. Net profit for the quarter declined 59.39% to Rs 921.90 million, while total income for the quarter rose 2.87% to Rs 12932.80 million, when compared with the prior year period. Company posted earnings of Rs 7.32 a share during the quarter, registering 60.56% decline over prior year period."

"At the current market price of Rs.688.90, the stock is trading at 10.52 x FY12E and 9.52 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.65.45 and Rs.72.33 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 9% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 7.13 x for FY12E and 6.48 x for FY13E. Price to Book Value of the stock is expected to be at 2.24 x and 1.81 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs.778.00 for Medium to Long term investment," says Firstcall research report.

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To read the full report click on the attachment