Buy Tech Mahindra; target of Rs 900: ICICI Direct
ICICI Direct is bullish on Tech Mahindra has recommended buy rating on the stock with a target price of Rs 900 in its research report dated November 06, 2019.
November 06, 2019 / 10:54 AM IST
ICICI Direct's research report on Tech Mahindra
Tech Mahindra (TechM) reported a healthy performance on all fronts. The key highlights for the quarter were constant currency revenue growth of 4.1% QoQ (better than ours and Street estimates), record deal wins (increased 3.1x QoQ to US$1.5 billion) and growth in digital revenues (11.8% QoQ, 37.4% YoY). Digital now contributes 39.0% of overall revenues. The revenue beat was driven by the better-than-expected performance in the enterprise segment, which grew 4.8% sequentially.
Further, considering most margin headwinds being absorbed in FY20E, we believe FY21E could witness EBIT margin expansion to 14.3%. Hence, we maintain our BUY recommendation with a revised target price of Rs 900/share.
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