January 31, 2017 / 17:08 IST
Tech Mahindra reported a strong set of numbers for Q3 FY17 which beat our estimates on all fronts. Dollar revenue was reported at $1,116 Mn, 4.1% up qoq and 1.9% above our estimate of $1,095 Mn, while margins stood at 12.4%, up 90 bps qoq.
OutlookTechM reported a solid set of numbers in Q3 and displayed sustainable growth in Telecom business along with continuous improvement in deal wins. Management confidence on win rates, engagements and market opportunities is noteworthy as Tier I peers struggle to maintain growth momentum and consistency. We are also optimistic about portfolio restructuring initiatives in LCC business and expect recovery process to continue through FY18E. We believe that the management’s stance on aggressively pursuing Digital, Automation, Innovation and Disruption is a right one and will drive revenue growth along with profitability. We have an “ACCUMULATE” rating on the stock as we assign a multiple of 14.5x to its FY18E EPS to arrive at a price target of INR 513.
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