Buy Tech Mahindra; target Rs 1180: Dolat Capital
Dolat Capital is bullish on Tech Mahindra and has recommended buy rating on the stock with a target price of Rs 1180 in its November 5, 2012 research report.
November 07, 2012 / 12:30 IST
Dolat Capital is bullish on Tech Mahindra and has recommended buy rating on the stock with a target price of Rs 1180 in its November 5, 2012 research report.
Tech Mahindra reported 6% QoQ growth despite challenging business outlook in the Telecom vertical driven by new deal momentum and inorganic efforts. We remain positive on the stock in view of its renewed proactive efforts to drive the revenue momentum, integration gains from Satyam and attractive valuations (8x FY14E earnings).Its Q2FY13 revenue stood at USD 299mn, up 6.4% QoQ (constant currency term USD 298mn). In reported currency terms company revenues grew by 5.7% QoQ at Rs 16.3bn inline with our estimates of Rs 16.4bn. The growth was largely driven by consolidation of 1 month revenues from HGS to the tune of USD 13mn. Comviva revenues would start consolidating in part of the quarter in Q3 and is not included in Q2.Non-BT revenues grew by 4% QoQ to USD 188mn sustaining the momentum. BT revenues declined further by 3% to USD 99mn despite 2% wallet share gain in the client business (a fall of about 10% from the committed levels).The revenues are likely to be driven by inorganic efforts (HGS and Comviva) as well as strong new deal closures (KPN, UK TSP). We believe strong structural growth along with OPM efficiency would drive the overall metrics of the company and thus the revision in rating. We maintain our Buy recommendation on the stock with a target price of Rs 1180, valued at 10x of FY14E earnings,” says Dolat Capital research report.Non-Institutions holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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