Buy Tech Mahindra; target of Rs 1060: Dolat Capital Market

Dolat Capital Market is bullish on Tech Mahindra has recommended buy rating on the stock with a target price of Rs 1060 in its research report dated April 26, 2021.

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// else // $ (‘#toptitleTXT’).html(tickTxt+typevar+’already exists in your watchlist’); // //} } //$ (‘.accdiv’).html(”); //$ (‘.accdiv’).html(appndStr); } }, //complete:function(d){ // if(typparam1==1) // { // watchlist_popup(‘open’); // } //} }); }); } else { var disNam =’stock’; if($ (‘#impact_option’).html()==’STOCKS’) disNam =’stock’; if($ (‘#impact_option’).html()==’MUTUAL FUNDS’) disNam =’mutual fund’; if($ (‘#impact_option’).html()==’COMMODITIES’) disNam =’commodity’; alert(‘Please select at least one ‘+disNam); } } else { AFTERLOGINCALLBACK = ‘overlayPopup(‘+e+’, ‘+t+’, ‘+n+’)’; commonPopRHS(); /*work_div = 1; typparam = t; typparam1 = n; check_login_pop(1)*/ } } function pcSavePort(param,call_pg,dispId) { var adtxt=”; if(readCookie(‘nnmc’)){ if(call_pg == “2”) { pass_sec = 2; } else { pass_sec = 1; } var url = ‘//www.moneycontrol.com/mccode/common/saveWatchlist.php’; $ .ajax({url:url, type:”POST”, //data:{q_f:3,wSec:1,dispid:$ (‘input[name=sc_dispid_port]’).val()}, data:{q_f:3,wSec:pass_sec,dispid:dispId}, dataType:”json”, success:function(d) { //var accStr= ”; 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Dolat Capital Market’s research report on Tech Mahindra

TECHM reported CC growth of 0.7% QoQ (DE: 2.0%) due to weak performance of most verticals except BFSI (4.9% QoQ growth). EBIT margin further improved by 55bps to 16.5% (DE: 15.5%) led by higher off-shoring and improved operational efficiency. Net New TCV signings showed a strong improvement at $ 1Bn (Expects similar traction in Q1) while TTM TCV were down 40% at $ 2.2Bn. It has guided for double digit growth in FY22 which is led by improved deal win momentum and recovery in Retail/Mfg./Telecom Verticals. Guided for EBIT Margin of 15%+ for FY22E as it expects to overcome headwinds of upcoming hike (from April’21), hiring, deal ramp-up costs, through operational efficiencies and operating leverage.

Outlook

Factoring modest results, confident outlook and strong TCV performance, we increase our earnings estimates by 4%/3% in FY22E/FY23E and maintain Accumulate rating with TP of Rs1060 valued at 18x FY23E EPS.

For all recommendations report, click here

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