Views on Tech Mahindra 3QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking) on Tech Mahindra 3QFY2016 Results:

Tech Mahindra (CMP: INR 499/ TP: INR 646 / Upside: 29.5%)

"Tech Mahindra for 3QFY2016 posted a 0.4% QoQ growth to end the period at US$ 1,015mn V/s US$ 1,021mn expected and V/s US$ 1,011mn in 2QFY2016. In INR terms, the company posted sales of INR 6,701cr V/s INR 6,729cr expected, a QoQ growth of 1.3%. On Constant currency (CC), the company posted a 1.2% QoQ growth.

The growth was mainly driven by the ROW, which constituted around 23.2% of sales in 3QFY2016 V/s 21.9% of sales in 2QFY2016. USA and Europe constituted 47.8% (48.9% of sales in 2QFY2016) and 28.9% (29.3% of sales in 2QFY2016). In terms of Industry the manufacturing drove the growth. On the operating front, the EBDITA came in at 16.9% V/s 17.2% expected and 16.6% in 2QFY2016, a QoQ expansion of 60bps, while the EBIT came in at 14.3% V/s 14.2% expected and 13.7% in 2QFY2016. On net profit, the company posted a net profit of INR 759cr V/s INR 809cr expected V/s INR 786cr in 2QFY2016, a QoQ de-growth of 3.4%.

On the operating matrix, the company had utilisation level of 77% same as last quarter, while the attrition rate was around 20% also in line with the last quarter. In terms of client addition, the company added 13 clients ending with active client base of 801. We remain positive on the stock with a price target of INR 646."

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.475.3 as compared to the previous close of Rs. 498.8. The total number of shares traded during the day was 344844 in over 10575 trades.

The stock hit an intraday high of Rs. 498 and intraday low of 473. The net turnover during the day was Rs. 166166322.

Source : Equity Bulls

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