Tech Mahindra - Q1FY21 Result Update - ICICI Securities

Tech Mahindra (TechM)'s revenues declined 6.7% QoQ to US$1,207.5 million mainly led by 8.6% QoQ decline in communication revenues and 5.4% QoQ decline in Enterprise revenues. However, the EBITDA margin increased 16 bps QoQ to 14.3% mainly led by SG&A rationalisation and lower discretionary spend. The order book declined 43% QoQ due to delay in deal closure on the enterprise side.

Valuation & Outlook

We believe ramp up of large deal won in previous quarters and improvement in deal wins in coming quarters will drive revenues. Further, in the long term, we believe its leadership in communication vertical will make it a key beneficiary of vendor consolidation in the segment. It would also benefit from 5G opportunities. Enterprise segment will also benefit from improved digital traction, success in large deals. Hence, we remain positive on the stock and maintain BUY with revised TP of Rs. 765 (15x PE on FY22E EPS).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TechM_Q1FY21.pdf

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.683.5 as compared to the previous close of Rs. 664.05. The total number of shares traded during the day was 819827 in over 18160 trades.

The stock hit an intraday high of Rs. 702.4 and intraday low of 668. The net turnover during the day was Rs. 562641217.

Source : Equity Bulls

Keywords