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Last Updated : Jul 28, 2020 09:31 AM IST | Source: Moneycontrol.com

Tech Mahindra share price rises 5% post Q1 result; JPMorgan, CLSA raise target

CLSA has maintained buy rating on the stock and raised target price to Rs 700 from Rs 570.

 
 
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Tech Mahindra share price rose 5 percent in early trade on July 28 after the company reported its June quarter earnings on July 27.

The company's consolidated net profit increased by 20.9 percent sequentially to Rs 972.3 crore in June quarter 2020, aided by higher other income and low base in the previous quarter.

The firm reported an impairment of goodwill and non-current assets at Rs 217.5 crore, while other income grew by 45.9 percent to Rs 416.1 crore QoQ during Q1 FY21.

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Consolidated revenue from operations fell 4 percent QoQ to Rs 9,106.3 crore and dollar revenue dropped 6.7 percent to $1,207.5 million hit by COVID-19-led lockdown.

Checkout what brokerages' says about the stock and company post the Q1 results:

JPMorgan | Rating: Overweight | Target: Raised to Rs 740 from Rs 680

The company beat low Q1 expectations across all the metrics, while deal wins were softer than peers as several cyclical headwinds are behind.

The growth recovery momentum should be solid till Q4. JPMorgan raised revenue estimates by 3/4/4%, and margin by 156/55/24 bps for FY21/22/23.

In the medium-term, it should benefit from telcos’ spend on network optimisation. The stock provides attractive risk-reward at 13x FY22e P/E, reported CNBC-TV18.

Citi | Rating: Buy | Target: Rs 800

The margin recovery was ahead, while Q1 EBIT 11 percent was ahead of the expectations. The management commentary was cautiously optimistic.

Citi raised FY21/FY22 EPS estimates by 3-4% & multiple to 15.5x from 14x, reported CNBC-TV18.

Goldman Sachs | Rating: Buy | Target: Rs 763

Research house raised EPS estimates by up to 8 percent on improving growth trajectory. The margin may improve on lower travel, facility expenses, higher offshoring & automation, reported CNBC-TV18.

CLSA | Rating: Buy | Target: Raise to Rs 700 from Rs 570

The Q1 earnings were good but not great. The strong margin management in the Q1.

The low revenue growth visibility could constrain stock’s incremental moves. CLSA adjust FY21/FY22 EPS estimates by 12%/4%, reported CNBC-TV18.

Prabhudas Lilladher | Rating: Upgrade to accumulate from reduce | Target: Rs 716

The company delivered better than estimates revenue & margins performance. FCF to PAT% at 245% which is highest ever.

Management mentioned worst is behind & expect improvement from hereon from revenue, margin front & TCV. Prabhudas Lilladher now expect 5% revenue decline dollar terms in FY21E (earlier: -9.7%) & have increased our margin estimates. Margin upgrades led to EPS upgrades of 16%/11% for FY22/23E.

ICICIdirect | Rating: Buy | Target: Rs 765

ICICIdirect believes ramp-up of large deal won in previous quarters and improvement in deal wins in coming quarters will drive revenues. Further, in the long term, it believes its leadership in communication vertical will make it a key beneficiary of vendor consolidation in the segment.

It would also benefit from 5G opportunities. Enterprise segment will also benefit from improved digital traction, success in large deals.

Dolat Capital | Rating: Accumulate | Target: Rs 720

The company expects the revenues to improve in this vertical both on supply-side factor as well as improved funnel in US market especially in BFSI, Hitech and Healthcare vertical. Also, expect better deal closures. The company also expects to maintain a tight leash on all costs and that should help it improve profitability hereon.

Factoring in inline results, soft TCV and modest outlook Dolat Capital have broadly kept its growth/OPM estimate largely intact.

At 09:18 hrs Tech Mahindra was quoting at Rs 699.45, up Rs 35.40, or 5.33 percent on the BSE.
First Published on Jul 28, 2020 09:31 am
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