Views on Tech Mahindra 2QFY2016 Result: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Tech Mahindra - 2QFY2016 Results:

"Tech Mahindra, posted a better than expected results in 2QFY2016.Tech Mahindra posted a 2.2% QoQ growth to end the period at US$1,011mn expected V/s US$1,004mn and V/s US$989mn in 1QFY2016. In rupee terms, the company posted a 5.1% QoQ growth of INR 6,616cr V/s INR 6,577cr expected and INR 6,294cr in 1QFY2016. The growth was primarily driven by the USA, which contributed around 48.9% of sales in 2QFY2016 and 47.7% of sales in 1QFY2016. Amongst the verticals, the Communication and the Technology, media and Entertainment industries drove growth with these industries contributing 52.9% of sales ( 52.7% of sales in 1QFY2016) and 8.2% of sales ( 7.3% of sales in 1QFY2016) respectively.

On the EBIDTA front, the margins came in at 16.6% V/s 15.9% expected and 14.9% in 1QFY2016. On EBIT front, the company posted a 13.7% EBIT V/s 13.1% expected and V/s 12.1% in 1QFY2016. The margin expansion was driven by the improved capacity utilization, which moved up from 74% in 1QFY2016 to 77% in 2QFY2016. Excluding the trainee, the utilization inched up to 79% V/s 75% in 1QFY2016. The attrition rate during the quarter was 20% V/s 19% in 1QFY2016. Thus, the Net Profit came in at INR 786cr V/s INR 725cr expected and INR 676cr in 1QFY2016, a QoQ growth of 16.2%. During the quarter, the company added 18 clients, with one client added in US$50mn+, 2 in US$10mn+. We currently have BUY rating on the stock with a price target of INR 646."

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.557.1 as compared to the previous close of Rs. 555.55. The total number of shares traded during the day was 170745 in over 4426 trades.

The stock hit an intraday high of Rs. 562.85 and intraday low of 549.1. The net turnover during the day was Rs. 94986482.

Source : Equity Bulls

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