KR Choksey's research report on Tech Mahindra
Tech Mahindra’s Q2FY25 revenue met our estimates while earnings surpassed expectations. Revenue stood at INR 133,132 Mn, up 3.5% YoY (+2.4% QoQ). New deal wins stood at USD 603 Mn, down 5.8% YoY (+12.9% QoQ). EBIT stood at INR 12,804 Mn, up 111.1% YoY (+16.2% QoQ), exceeding our expectations by 4.5% due to lower than anticipated other expenses and reduced contracting expenses, resulting in margin expansion by 490bps YoY (+114bps QoQ) to 9.6%. PAT stood at INR 12,501 Mn, up 153.1% YoY (+46.8% QoQ), exceeded expectations driven by better operating performance and higher than anticipated other income, resulting in margin expansion by 555bps YoY (+284bps QoQ) to 9.4%.
Outlook
We project FY26E EPS of INR 66.7 and assign a P/E multiple of 27.0x, reflecting recent deal wins, margin enhancement initiatives, and a positive outlook for discretionary spending, bolstered by recent interest rate cuts. As a result, we increase our target price to INR 1,801 and retain our “ACCUMULATE” rating on the shares of Tech Mahindra Ltd.
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