Emkay Global Financial's report on Tech Mahindra
Tech Mahindra gave further insights into NXT.NOW growth strategy at an analyst meet. It also shared updates on progress made on large deals participation and win rate, steps taken to broaden growth, account segmentation, delivery excellence and capital allocation. The company remains confident of delivering double-digit organic revenue growth in FY22, given broad-based demand, strong deal wins (USD3bn in LTM), improving win rates (2x growth) and steady progress on client mining. TechM reiterated its guidance to maintain EBITM at 15% with an upward bias in FY22 on the back of revenue momentum, automation-led operating efficiencies, and offshore shift, negating salary inflation, spike in attrition and normalization of WFH savings.
Outlook
We maintain Buy with a TP of Rs1,870 at 25x Sep’23E EPS, considering an improving revenue growth trajectory with a stable-to-improving margin profile, improving payout (~60% of FCF on 3-year rolling basis) and reasonable valuations.
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