March 07, 2017 / 12:36 IST
Tech Mahindra (TECHM) announced acquisition of CJS Solutions (CJS, d.b.a. HCI group), an IT and consulting services company for healthcare players based in the US and UK. The acquisition will open cross-selling opportunities for TECHM and strengthen its prowess in the fast growing healthcare & life sciences vertical, which currently contributes sub-5% to the company’s revenue.
Outlook
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We believe, valuation at 1.0x EV/sales for TTM September 2016 is reasonable considering TECHM’s focus on enhancing presence in the fast-growing healthcare space. We have not factored impact of the acquisition as we await regulatory approval (likely by Q1FY18). Maintain ‘BUY’ with INR 642 target price.
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