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Tech Mahindra share price edges higher ahead of Q1 results

Analysts expect profit and revenue to rise QoQ on weaker rupee. The software company is expected to retain revenue growth guidance of 8-10 percent, including 6-8 percent in telecom (excluding 5G), and 8-10 percent in enterprise for FY22

July 29, 2021 / 12:24 PM IST
Tech Mahindra | Representative Image

Tech Mahindra | Representative Image

 
 
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Tech Mahindra share price added a percent intraday on July 29 ahead of June quarter results.

The IT firm may see its dollar revenue grow 2.4 percent QoQ at $1,362 million with 30 bps of cross-currency gains, says experts. Revenue growth is likely to be led by 1 percent contribution from acquisitions and by ramp-up of deals in the previous quarters.

The company may see its profit after tax (PAT) rise by 8 percent QoQ due to lower tax and higher other income.

In rupee terms, the company is expected to see revenue growth of 3.1 percent QoQ amid a weaker rupee at Rs 10,030 crore against Rs 9,730 crore QoQ, they said. EBIT margins are seen at 16 percent, down 50 bps QoQ with margin headwinds on the back of wage hikes.

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Growth is likely to be led by enterprise business with deal momentum likely to continue. The software company is expected to retain revenue growth guidance of 8-10 percent, including 6-8 percent in telecom (excluding 5G), and 8-10 percent in enterprise for FY22.

The factors to watch out would be an outlook on deal pipeline and conversion rates with update on 5G spending outlook.

The stock was trading at Rs 1,136.10, up Rs 16.60, or 1.48 percent at 1159 hours. It has touched an intraday high of Rs 1,140.90 and an intraday low of Rs 1,125.20.

Brokerage firm Prabhudas Liladher has maintained a buy on the stock with target of Rs 1,237 per share. "We value the stock at 17X on Sept-23 EPS (roll over) of Rs 72.7 to arrive at target of Rs 1,237 (earlier Rs 1,085) with revenue & earnings CAGR of 11.9%/16.7% respectively. The company is currently trading at 18.8X/16.6X on EPS of Rs 61.1/69.1 on FY22/23E respectively," it said.

Disclaimer: The views and investment tips expressed by investment experts 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.
Moneycontrol News
first published: Jul 29, 2021 12:24 pm

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