Motilal Oswal's research report on Tech Mahindra
Tech Mahindra (TECHM) reported another quarter of weak performance, with revenue declining 2.4% QoQ in constant currency (CC) to USD1.6b, which missed our estimate of a 1.1% decline. The weakness was primarily caused by a continued slowdown in CME, which was down 4.9% QoQ and BFSI, which was down 2.8% QoQ. However, Manufacturing showed continued strength with 2.3% QoQ growth. EBIT margin (adjusted for organizational restructuring) contracted 150bp QoQ to 7.3% in 2QFY24, below our estimate of 8.7%. TCV of USD640m (+78% QoQ/-10.6% YoY) improved in 2QFY24 after reporting two consecutive quarters of decline.
Outlook
We are staying on the sidelines because we believe that the current valuation adequately accounts for the uncertainties surrounding growth and margin. We reduce our FY24/FY25 EPS estimates by 2-10% due to sluggish growth and a subdued outlook. Reiterate Neutral with a TP of INR1,040 (premised on 19x FY25E EPS).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
