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Last Updated : Jun 13, 2019 02:01 PM IST | Source: Moneycontrol.com

Accumulate Tech Mahindra; target of Rs 880: Dolat Capital

Dolat Capital recommended Accumulate rating on Tech Mahindra with a target price of Rs 880 in its research report dated May 22, 2019.

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Dolat Capital's research report on Tech Mahindra


TECHM reported muted Q4FY19 results, which were largely in line with our estimates. The company’s communication business grew in Q4FY19, but fell 1% YoY in USD terms in FY19. This was below the management’s guidance of a low single digit growth. The management is confident of total revenue growth in FY20, but expects the communication business to contribute the bulk of the rise. TECHM should report a USD revenue growth of 8.5%/9.5% in FY20E/FY21E, as we believe healthy deal wins will raise revenue and lower volatility in the enterprise business. We expect TECHM to report a margins decline of 100bps in FY20E, as wage hikes, visa costs, and seasonality in Comviva are likely to impact margins in Q1FY20. We downgrade our earnings 4.8%/9.2% for FY20E/FY21E, as we factor in volatility in the enterprise business, lower margins, and a change in our USD/INR assumption to ` 70 (vs ` 74/` 76 for FY20E/FY21E earlier).


Outlook


We downgrade TECHM to ACCUMULATE, with a TP of ` 880 based on 15x one-year fwd. PER.


For all recommendations report, click here


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First Published on Jun 13, 2019 02:01 pm
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