Buy Tech Mahindra; target of Rs 1220: Sharekhan

Sharekhan is bullish on Tech Mahindra has recommended buy rating on the stock with a target price of Rs 1220 in its research report dated November 01, 2022.

Broker Research

November 02, 2022 / 19:37 IST

Sharekhan's research report on Tech Mahindra

Tech Mahindra (TechM) reported revenues for Q2FY23 at $1,638 million up 2.9% q-o-q in constant currency which was in line with our estimates led by strong performance by the Manufacturing, Technology and Retail verticals. EBIT margin at 11.4% for Q2FY23 was up 32 Bps q-o-q owing to lower SG&A expenses and lower subcontracting costs which was partially offset by higher employee benefits costs and higher depreciation. Deal momentum continued to be healthy with deal TCV at $716 million but has moderated from $802 million TCV seen in Q1FY23. Management expects to achieve 14% EBIT margin by Q4FY2023 and stated that margin benefits would flow in the next two quarters due to portfolio pruning especially on low margin business.

Outlook

We maintain a Buy on TechM with an unchanged PT of Rs. 1,220, given healthy deal wins and reasonable valuation.

For all recommendations report, click here