Tech Mahindra - Strategy to bolster the growth - Prabhudas Lilladher

We attended Tech Mahindra's Analyst Meet. The management laid-out its strategy to achieve its aspiration of $5bn revenue by 2015. Retain our "BUY" rating.

Four plank strategy for $5bn aspiration: The management is currently working on four plank strategy to achieve its aspiration: 1) Business Momentum: The focus on expanding and growing their existing portfolio of enterprise business around Telecom, Manufacturing and BFSI. 2) Innovation: The investment in development of product 3) Platforms: The line-up for new platform using incubation, partners and acquisition strategy 4) Inorganic Growth: Eyeing for acquisition to expand market, strategic offering, & new clients acquisition.

No one solution fit all market approach: The management is prudent in taking different approach to penetrate different market. The company has verticalized specialist sales team in North America and UK. However, the company has 5 geographies specific sales team for Continental Europe and 6 for Rest of World. We believe a more focused sales approach would yield a better result.

Telecom - An anchor theme for growth: Telecom continues to be key focus area for the company. The company highlighted 6 pillars strategy to focus on CXO (COO, CMO, CFO, CIO, CTO, CSO) with service offerings (IT, Network, Infrastructure, BSG, VAS, Security) for the growth. The management is eyeing to protect & grow existing revenue, enable enterprise productivity, and enrich customer experience to grow revenue from TSPs. The company will continue with strategic account focus and cross sell services to push for growth.

Manufacturing and BFSI - Two stroke engine for propelling growth: Manufacturing, a strong Satyam legacy, is gaining traction due to lineage with M&M (ERP/SCM). They are eyeing for Digital Enterprise Solution for their manufacturing clients. The opportunities in BFSI are in Retail Banking, Payments, Asset Management, and Risk. Moreover, new technologies (NMAC) and investment ins solution (FATCA) will provide non-linear opportunities in space.

IMS - Playing on strength: The company has invested in platforms and frameworks to help exploring opportunities in Infrastructure consolidation as a growth opportunity. We see it as a strong player in IMS and Network Services.

Source : Equity Bulls

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