Views on Tech Mahindra Ltd Q2FY2018 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - IT, Angel Broking):

"The company posted higher than expected on all fronts. In rupee terms, revenues came in at INR 7,606cr V/s INR 7,582cr expectations, up 3.7% QoQ. The growth was mainly driven Europe and ROW; while USA dipped in growth. In terms of Industry; Retail, Transport & Logistics was driving the growth; while the Communications, Manufacturing and BFSI posted dip during the quarter. In terms of the Industry, all the major Industry verticals apart from the Communications which was in decline last quarter; other major industry verticals like BFSI and Manufacturing which grew last quarter, posted a dip qoq.

On the operating front, the utilization levels during the quarter came in at 81% V/s 77% in 1QFY2018, which along with volume also aided the margins to come in higher. On the operating front the EBITDA margin, came in at 14.5% V/s 14.0% expected, and 12.7% in 1QFY2018; a QoQ expansion of 50bps QoQ. Consequently, PAT came in at INR 836cr V/s INR 886cr expected, a growth of 4.7% QoQ. On the client additions front, the company added 21 clients; with major of the client additions of US$1-5mn. Also, in terms of the growth drivers, the main driver has been client additions during the quarter; with repeat business contributing 95% V/s 97.2% in 1QFY2018. We maintain our ACCUMULATE rating on the stock, with a price target of INR 526."

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.489 as compared to the previous close of Rs. 481.35. The total number of shares traded during the day was 239439 in over 3493 trades.

The stock hit an intraday high of Rs. 497.6 and intraday low of 472. The net turnover during the day was Rs. 116922166.

Source : Equity Bulls

Keywords