Dolat Capital's research report on Tech Mahindra
Revenue inline with 6.3% QoQ decline led by persistent challenges in Telecom vertical (down 8.2% in CC terms). Tight cost measures and Fx tailwinds drove OPM beat with QoQ gains of 10bps at 10.1% (DE 9.2%). PAT beat was led by one-time gains of US$60mn. TCV signings were soft at US$290mn but still the management commentary remains hopeful of recovery hereon given record funnel across vertical and better deal-closure expectancy in Q2. Believes worst-is-behind and expect improved performance in Telecom (Pipeline at multi-year high) as well as Enterprise segment (US pipeline quite healthy across HiTech, BFSI and Healthcare).
Outlook
Modest growth in Q1, Weak TCV signing, sustained delays in 5G roll-outs suggest no material uptick expected in Q2 and thus we broadly maintain our estimates and retain our Accumulate rating on the stock with TP of Rs720 (valued at 15x FY22E earnings – inline with 3ry Median PER).
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