Angel Broking neutral on Tech Mahindra

Angel Broking's report on Tech Mahindra

"Tech Mahindra’s 3QFY2015 results have come in in line with our expectations on the sales and EBIT fronts, while the net profit has come marginally above our estimate. The company clocked 2.7% qoq USD revenue growth to end the period at US$924mn V/s an expected US$920mn. In constant currency (CC) terms, the company posted a 4.9% qoq growth. On the operating front, the EBITDA margin moved up by 17bp qoq to 20.2% V/s an expected 20.4%. The company’s net profit grew by 7.9% qoq to `777cr V/s an expected `766cr. Also, the company announced the approval for a 1:1 bonus and sub-division of its equity shares in the ratio of 2:1."

Outlook and valuation: "The Management remains confident of growth from the non-British Telecom (BT) business with the company continuing to see a robust deal pipeline across geographies. We expect a CAGR of 22.2% and 21.4% in USD and INR revenue respectively over FY2014-16E. The PAT is expected to grow at a CAGR of 17.9% over FY2014-16. We maintain our Neutral rating on the stock", says Angel Broking research report.

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