Buy Tech Mahindra; target of Rs 1100: Sharekhan

Sharekhan's research report on Tech Mahindra

Beat our estimates on all fronts; TechM impressed with continued margin expansion, healthy FCF generation, and healthy deal pipeline. The company won a deal of $50 million TCVs in the 5G rollout space in Europe. Given robust pipeline in the enterprise segment ($4.5 billion) and conversion of deals in the communication space, net new deal TCVs are expected to accelerate in the coming quarters. We prefer TechM because of anticipated improvement in growth in the enterprise segment, 5G opportunity, and scope for margin improvement. We assume TechM would report USD revenue/earnings CAGR of 9%/13%, respectively.

Outlook

We maintain our Buy rating on Tech Mahindra (TechM) with an unchanged PT of Rs. 1,100, as it is trading at an attractive valuation.

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