Please refer to important disclosures at the end of this report
Tech Mahindra Ltd (TML) is an M&M group company engaged in the
business of providing Information Technology-based (IT) solutions to various
clients. The company derived about ~45% of its revenues from North
America, ~30% from Europe and ~25% from the Rest of the World for FY17
limiting its dependence on any single geography adding to revenue
healthiness. The Management is more optimistic about its performance in the
2HFY2018 because of seasonality in the Communication business. The
company has been active in the M&A space with it having acquired Satyam a
few years back, to acquiring LCC and Softgen recently. With this acquisition,
Tech Mahindra will also be addressing a rapidly growing market opportunity,
as telecommunications companies and enterprises accelerate their network
upgrade cycle. The company has healthy Interest coverage ratio to 38 times
in FY17 on account of limited interest payments. The company also has
substantial financial flexibility on account of its strong liquidity position, cash
and current investments of `5,262cr at end FY17 and limited repayment
obligations. It has been maintaining dividend payout of 30% over last 3
years. It has reported a top line and bottom line growth of 40% and 20%
CAGR respectively over FY12-17. Also the cashflows has improved from
`711.70cr in FY12 to `4071.4cr in FY17. TML has reported RoE of 18.65%
TTM earnings and is trading at 17.7x of FY17 earnings. Hence BUY.
CMP `553
Reuters Code
BSE Sensex
Face Value (`)
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Tech Mahindra Ltd
Others | IT
Jan 17, 2018
Tech Mahindra |IT
June 5, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Tech M
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)