Q3FY21 Result Update - Tech Mahindra - ICICI Direct

Tech Mahindra's (TechM) revenues increased 2.8% QoQ in constant currency terms (above our estimate of 1.6% QoQ in CC terms) mainly led by 4.5% QoQ growth in communication revenues and 2.7% QoQ growth in Enterprise revenues. The company also reported a healthy expansion in EBITDA margins (up 156 bps QoQ to 19.6%) mainly led by higher utilisation and gross margin expansion. The order book improved 8.1% QoQ to US$455 million.

Valuation & Outlook

Increase in large lift & shift deals, digital technologies, improving 5G spend (on communication & enterprise side), large deals and acceleration in Europe bode well for the company's revenue growth. This, coupled with improving margin trajectory and attractive valuation prompt us to be positive on the stock. Hence, we maintain BUY with a revised target price of Rs. 1,120 (16 x PE on FY23E EPS) (earlier target price was Rs. 1,105).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_TechM_Q3FY21.pdf

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.961.65 as compared to the previous close of Rs. 982.55. The total number of shares traded during the day was 125411 in over 6617 trades.

The stock hit an intraday high of Rs. 995.45 and intraday low of 954.9. The net turnover during the day was Rs. 122694025.

Source : Equity Bulls

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