Tech Mahindra - 4QFY2016 Result Update - Angel Broking

Tech Mahindra posted sales of Rs. 6,884cr for 4QFY2016 (V/s Rs. 6,701cr in 3QFY2016), which is a QoQ growth of 2.7%. In US$ terms, sales came in at US$1,023mn (V/s our expectation of US$1,021mn), a QoQ growth of 0.8%. In terms of geographies, growth was driven by ROW (accounted for 24.7% of sales V/s 23.2% of sales in 3QFY2016). In terms of industry, growth was driven by BFSI (which accounted for 10.6% of sales V/s 9.8% of sales in 3QFY2016). On the operating front, the EBDITA margin came in flat on a QoQ basis at 16.9%, while the EBIT margin stood at 13.7% V/s 14.4% in 3QFY2016. The net profit came in at Rs. 897cr V/s Rs. 759cr in 3QFY2016, a QoQ growth of 18.2%, mainly driven by a rise in other income. Other income for the quarter stood at Rs. 166cr V/s Rs. 64cr in 3QFY2016. We maintain our Buy on the stock.

Result highlights: Tech Mahindra posted sales of Rs. 6,884cr for 4QFY2016 (V/s Rs. 6,701cr in 3QFY2016), which is a QoQ growth of 2.7%. In US$ terms, sales came in at US$1,023mn (V/s our expectation of US$1,021mn), a QoQ growth of 0.8%. In terms of geographies, growth was driven by ROW (accounted for 24.7% of sales V/s 23.2% of sales in 3QFY2016). Europe accounted for 28.5% of sales V/s 28.9% in 3QFY2016, while USA contributed 46.8% of sales V/s 47.8% in 3QFY2016. In terms of industry, growth was driven by BFSI (which accounted for 10.6% of sales V/s 9.8% of sales in 3QFY2016). On the operating front, the EBDITA margin came in flat on a QoQ basis at 16.9%, while the EBIT margin stood at 13.7% V/s 14.4% in 3QFY2016. The net profit came in at Rs. 897cr V/s Rs. 759cr in 3QFY2016, a QoQ growth of 18.2%, mainly driven by a rise in other income. Other income for the quarter stood at Rs. 166cr V/s Rs. 64cr in 3QFY2016.

Outlook and valuation: The Management remains confident of reverting back to the original profitability by FY2016-18E. We expect a CAGR of 10.6% and 12.8% in USD and INR revenue respectively over FY2016-18E, driven by acquisitions. The PAT is expected to grow at a CAGR of 13.2% over FY2016-18E. We maintain our Buy on the stock.

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.549.65 as compared to the previous close of Rs. 546.25. The total number of shares traded during the day was 238295 in over 5396 trades.

The stock hit an intraday high of Rs. 557.1 and intraday low of 546.55. The net turnover during the day was Rs. 131303431.

Source : Equity Bulls

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