Neutral Tech Mahindra; target of Rs 1910: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Tech Mahindra

TECHM has announced the acquisition of Com Tec Co IT (CTC), an East European IT Services company with a presence in the Digital engineering and outsourced product development space, for EUR310m. -CTC services clients in the Insurance vertical, which should strengthen TECHM’s capabilities in that space. It has development centers in Eastern Europe (Latvia and Belarus) and has a workforce of 720. TECHM has also acquired a minority stake (25%) in two group SaaS companies (SWFT and Surance) for EUR20m, along with an option to acquire an additional 20% at current levels. CTC had a revenue of EUR36.6/EUR57.6/EUR71.3 in CY18/CY19/CY20, implying ~40% CAGR, although the growth has progressively moderated. It posted a revenue of EUR58.8m for the nine months ended Sep’21, implying a run-rate of ~EUR80m in CY21 (1.5% of TECHM’s FY22 revenue). As per the management, CTC has industry-leading EBIT margin and will be accretive on an EPS, RoE, and FCF basis. While TECHM has not shared additional details, our rough estimates suggest a PAT accretion of less than 1% to our FY23 estimate.

Outlook

We expect TECHM to deliver mid-teens growth in FY22. We value the stock at 22x FY23E EPS. We remain Neutral on the stock.

More Info

At 16:00 hrs Tech Mahindra was quoting at Rs 1,660.65, down Rs 61.00, or 3.54 percent.

It has touched an intraday high of Rs 1,746.30 and an intraday low of Rs 1,650.75.

It was trading with volumes of 144,037 shares, compared to its thirty day average of 121,490 shares, an increase of 18.56 percent.

In the previous trading session, the share closed down 1.01 percent or Rs 17.60 at Rs 1,721.65.

The share touched its 52-week high Rs 1,837.75 and 52-week low Rs 915.05 on 30 December, 2021 and 26 February, 2021, respectively.

Currently, it is trading 9.64 percent below its 52-week high and 81.48 percent above its 52-week low.

Market capitalisation stands at Rs 161,197.26 crore.For all recommendations report, click here

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