Buy Tech Mahindra: target of Rs 2060: Sharekhan

Sharekhan's research report on Tech Mahindra

Q3FY22 revenue was broadly in-line, while margins lagged estimates; Q3 saw healthy deal intake, strong deal pipeline, net hiring, good client mining and robust growth in BPS business. CME division reported strong growth of 6.2% q-o-q. With healthy deal wins, strong hiring and broad-based demand, we expect strong revenue growth in enterprise vertical in the medium-term. TechM is well-placed to capture opportunities in the 5G space given a strong client base and investments in building capabilities. Strong revenue growth, lower sub-contractor expenses, higher offshoring, benefits from tier-II cities and price hikes would negate margin headwinds in FY2023. USD revenue/earnings would clock a CAGR of 12%/16%, respectively, over FY22-FY24E.

Outlook

We maintain a Buy on TechM with a PT of Rs. 2,060, given healthy deal wins, a strong deal pipeline, higher 5G contribution and scope for margin improvement.

More Info

At 17:30 Tech Mahindra was quoting at Rs 1,455.05, down Rs 27.70, or 1.87 percent.

It has touched an intraday high of Rs 1,483.05 and an intraday low of Rs 1,449.90.

It was trading with volumes of 89,921 shares, compared to its thirty day average of 149,781 shares, a decrease of -39.97 percent.

In the previous trading session, the share closed down 1.61 percent or Rs 24.30 at Rs 1,482.75.

The share touched its 52-week high Rs 1,837.75 and 52-week low Rs 915.05 on 30 December, 2021 and 26 February, 2021, respectively.

Currently, it is trading 20.82 percent below its 52-week high and 59.01 percent above its 52-week low.

Market capitalisation stands at Rs 141,280.88 crore.

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