Bonanza's research report on Tech Mahindra
Recently, the stock price of Tech Mahindra Ltd. (Tech Mahindra) corrected by ~15% from 52-week high of Rs.515 as it has reported lower revenue growth in the recent quarters due to slower-than-expected growth in the enterprise segment, flatdeal TCV and consistent weakness in communication vertical.
Outlook
With transformed into a full range IT service provider, merger of MSAT with Tech Mahindra has created it fifth-largest player in the Indian IT services sector, healthy deal pipeline along with pick up in discretionary spending, steady growth in the enterprise segment for past several quarters and margin is expected to improve gradually in coming quarters, we value Tech Mahindra at 14.25x FY19E EPS of Rs.37.60 to arrive at target price of Rs.536, an upside of ~21%.
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