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Tech Mahindra Ltd Research Report - 10th Aug 2016

IT | Published on Aug 10th 2016

IT

For 1QFY2017, Tech Mahindra’s revenue came in at US$1,032mn V/s US$1,027mn expected and V/s US$1,023mn in 4QFY2016, a QOQ growth of 0.9%, driven by USA (which was 49.0% of sales V/s 46.8% in 4QFY2016), while ROW, constituting ~22.8% of sales V/s 24.7% in 4QFY2016 was a drag. On the operating front, the EBIT margin came in at 12.0% V/s 12.3% expected and V/s 13.7% in 4QFY2016, QoQ dip of 161bp. Thus, the Adj. net profit came in at Rs750cr V/s Rs816cr expected and V/s Rs858cr in 4QFY2016, a QoQ de-growth of 12.6%. We maintain our Buy. Result highlights: The company posted sales of ( in US$ terms ), of US$1,032mn V/s US$1,027mn expected and V/s US$1,023mn in 4QFY2016, a QoQ growth of 0.9%, driven by USA (which was 49.0% of sales V/s 46.8% in 4QFY2016), while ROW (constituting ~22.8% of sales V/s 24.7% in 4QFY2016) was a drag. In terms of industries, Manufacturing and BFSI were the key drivers of the top-line of the company. Manufacturing constituted ~18.1% of sales V/s 17.1% in 4QFY2016, while BFSI contributed ~11.3% of sales V/s 10.6% in 4QFY2016. On the operating front, the EBIT margin came in at 12.0% V/s 12.3% expected and V/s 13.7% in 4QFY2016, QoQ dip of 161bp. Thus, the Adj. net profit came in at Rs750cr V/s Rs816cr expected and V/s Rs858cr in 4QFY2016, a QoQ de-growth of 12.6%. Outlook and valuation: We expect a CAGR of 10.6% and 12.8% in USD and INR revenue respectively over FY2016-18E.The PAT is expected to grow at a CAGR of 13.2% over FY2016-18E. We maintain our Buy on the stock.

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CMP 495
Target Price 700
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)46,233.42
MCAP NSE (Rs in Cr)46,218.82
P/E (x)15.01
EPS (Rs.)31.65
BV (Rs.)158.36
Div Yield (%)2.51
FV (Rs.)5.00
P/BV (x)3.09
EV/Sales (x)1.70
EV/EBITDA (x)10.44

Shareholding Pattern (%)

Foreign40.0
Promoter36.0
Public & Others12.0
Institution11.0
Corporate1.0
Grand Total100.0

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