Views on Tech Mahindra Ltd 3QFY2017 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking) on Tech Mahindra Ltd 3QFY2017 Results:

Tech Mahindra (CMP: INR 466 / TP: INR 600 / Upside: 27.0%)

"Tech Mahindra posted results much better than expected on all fronts, in sales the company posted sales of US$1,116mn V/s US$1,091mn expected V/s US$1,072mn, a QoQ growth of 4.1%. In Constant Currency (CC) terms, company posted a 5.4% QoQ growth. In Rupee terms, the company posted sales of INR 7,558cr V/s INR 7,361cr expected V/s INR 7,167cr in 2QFY2017, a QoQ growth of 5.4%. The strong sales growth was aided by the ROW (which contributed around 23.9% V/s 22.0% of sales in 2QFY2017), while USA (which contributed 46.7% V/s 48.3% of sales in 2QFY2017) and Europe (which contributed 29.4% V/s 29.7% of sales in 2QFY2017). In terms of verticals it was BFSI (which contributed around 13.1% V/s 11.7% in 2QFY2017), Retail, transport & Logistics (which contributed around 7.6% of sales V/s 6.8% of sales in 2QFY2017).

On EBIT front, the company posted EBIT of 12.4% V/s 12.1% expected V/s 11.5% in 2QFY2016. The utilization levels improved to 83.0% V/s 82.0% in 2QFY2016. Consequently, PAT came in at INR 856cr V/s INR 733cr expected V/s INR 645cr in 2QFY2017, growth of 32.7% QoQ. The growth in the net profit was aided by the lower taxes during the quarter, which dipped 25.1% YoY. In client additions, the company added 15 clients but mostly in the US$5mn+. We maintain our BUY rating on the stock."

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.480.5 as compared to the previous close of Rs. 461.55. The total number of shares traded during the day was 352695 in over 6235 trades.

The stock hit an intraday high of Rs. 482.75 and intraday low of 462. The net turnover during the day was Rs. 167830652.

Source : Equity Bulls

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