Buy Tech Mahindra, target of Rs 990: Emkay Global

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Emkay Global Financial Services has maintained its buy rating on Tech Mahindra with a target price of Rs 990 in its July 22, 2008 research report. "Tech Mahindra reported revenues of USD 271.9 million (+5.5% QoQ), Rs 11.2 billion (+9.3% QoQ, 27.4% YoY), slightly ahead of expectations. Net profits at Rs 2585 million (+18.1% QoQ, +52% YoY) were significantly ahead of estimates helped by higher other income and lower tax rates (at 9.9% V/s our expectation of 12%)."

"We note that after tweaking our estimates for lower margins for the next 3 quarters (to build in transition costs on the new deal) and factoring in the impressive Q1FY09 performance, we see little downside risk to our adjusted FY09E earnings of Rs 73.5. With valuations at <10X adjusted FY09E earnings, we find valuations extremely compelling and expect stock to react positively to the good set of numbers. We maintain 'BUY' with a price target of Rs 990," says Emkay Global Financial Services' research report.

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