Buy Tech Mahindra; target of Rs 923: Geojit

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Geojit's research report on Tech Mahindra

In Q2FY21, revenue rose 2.9% QoQ (+3.3% YoY), owing to recovery in demand. In USD terms, on constant currency (CC) basis, revenue came in as mixed bag +2.9%/-3.0% on QoQ/YoY. EBIT margin expanded by ~410bps QoQ, led by demand/supply improvement (+160bps), prudent cost management (+160bps) and seasonality benefit (+160bps). No. of active clients stood at 988 vs. 981 in Q1FY21 and the company has won various multi-year deals to provide services across locations. The improved demand/supply scenario, margin expansion and increase in deal wins should support the company’s steady recovery.

Outlook

Hence, we retain our BUY rating on the stock with a revised TP of Rs. 923 on 17x FY22E adj. EPS.

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