January 31, 2017 / 15:35 IST
TECHM’s 3QFY17 revenue growth of 5.4% QoQ CC beat estimate of +3.1%, led by strong pick-up in BFSI and RoW. Organic CC revenue growth of 4% QoQ exceeded our estimate of +2.5%. Growth included incremental contribution from Target of 1%, slightly higher than our expectation (+0.6%).
OutlookOur thesis of a gradual recovery in Communications and margins, along with continued traction in Enterprise, was demonstrated in TECHM’s 3Q performance. 1.5% 3Q revenue beat does not drive upward estimates revision on account of some more portfolio pruning anticipated in LCC. We expect USD revenue/earnings CAGR of 9/13% over FY17-19. Our TP of INR 550 discounts FY19E earnings by 13x (17% upside). Buy.
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