Tech Mahindra Q2 PAT seen up 2.6% at Rs 669.9 cr: MOST

Motilal Oswal has come out with its second quarter (July-September) earnings estimates for the technology sector. The brokerage house expects Tech Mahindra to report a 2.6 percent growth quarter-on-quarter (up 58.6 percent Y-o-Y) in net profit at Rs 669.9 crore.

Sales of Tech Mahindra are expected to increase by 13.4 percent Q-o-Q (up 32.1 percent Y-o-Y) to Rs 4,653.5 crore, according to Motilal Oswal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to rise by 25.9 percent Q-o-Q (up 43.8 percent Y-o-Y) to Rs 1,088.6 crore.

Motilal Oswal's Report on Tech Mahindra:

We expect Tech Mahindra's revenues to grow 2.8 percent Q-o-Q to USD 745 million, partially aided (50bp) by one month of revenues from the acquisition of complex IT. revenues from BT are likely to decline sequentially, with growth in all other major segments.

In rupee terms, we expect revenue growth of 13.4 percent Q-o-Q to INR 46.5 billion.

We expect EBITDA margin to expand by 230bp Q-o-Q on account of rupee depreciation, following partial offset of tailwinds, with ransitionrelated expenses at onsite.

Our PAT estimate for the quarter is INR 6.7 billion (after adjusting for restructuring fees), up 2.6 percent Q-o-Q. This implies PAT margin of 14.4 percent, down 150bp Q-o-Q. 1Q PAT was boosted by INR 1.4 billion forex gains.

Tech Mahindra trades at 10.6x FY14E and 10x FY15E EPS.

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