Tech Mahindra share price touched a 52-week high of Rs 1,204.80, rising 7 percent within the early trade on July 30, each day after the corporate reported better-than-expected numbers for the June quarter.
The company reported a 30.8 percent jump in its first-quarter (April-June) net income at Rs 1,353.2 crore against Rs 1,081.4 crore within the quarter ended March 2021.
The company’s rupee revenue rose 4.8 percent at Rs 10,197.6 crore versus Rs 9,729.9 crore, QoQ.
Its earnings before interest and tax (EBIT) were down 3.6 percent at Rs 1,545.3 crore from Rs 1,603.7 crore and therefore the margin was at 15.2 percent from 16.5 percent within the previous quarter.
Citi has retained “buy” rating because the company reported an honest Q1 numbers with revenue /EBIT above expectations.
The deal TCVs was strong at $185 million for the second quarter during a row, while supply-side challenges were visible across the world .
The company’s attrition increased to 17 percent LTM, while it saw high subcontractor costs in Q1. Broking firm has raised FY22/23 EPS estimate by 3-4 percent because the company is one among top picks.
Bernstein has kept the “outperform” turn the stock because the company saw a robust revenue and margin hammer in Q1. The deal wins were healthy and therefore the growth outlook has been maintained.
The broking house increased FY22/23 EPS estimates by 4.3 percent/4 percent. The management maintained a double-digit revenue growth outlook for FY22.
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JPMorgan | Rating: Overweight | Target: Rs 1,250
JPMorgan has maintained its “overweight” rating on the corporate after it reported a robust Q1 print, with a beat across revenues, margins and profits.
The net new deal wins were healthy at $ 815 million, while revenue grew 3.9 percent CC QoQ. the corporate CEO guided for Q1 revenue growth trajectory to continue for the remainder of FY22.
Goldman Sachs | Rating: Neutral | Target: Rs 1,059
The company has done better than expected this quarter. The broking house increased EPS estimates and therefore the target but remained on the sidelines, given the shortage of broad-based digital capabilities.
Prabhudas Lilladher | Rating: Buy | Target: Rs 1,494
The management has outlined its strategy (repair, rally, rise beyond) to rework the business and accelerate growth and margins.
We are assigning target multiple of 20X (earlier 17X) on Sep-23 EPS of INR of 74.7 (35 percent discount to TCS 5-year average + 2SD of 30.6X) to reach a TP of INR 1494 (earlier: 1237) with revenue CAGR of 13.4 percent & EPS CAGR of 18.2 percent. TechM is trading at 17.7X/15.9X at EPS of INR 63.5/70.9 on FY22/23E respectively, inexpensive. Maintain “buy”.
Motilal Oswal | Rating: Neutral | Target: Rs 1220
We expect the corporate to deliver double-digit growth in FY22. However, the extent is probably going to be less than its peers. We value the stock at 17x FY23E EPS.
We have raised upward our earnings estimates for FY2022E/ FY2023E/FY2024E thanks to a robust all-round hammer in Q1FY2022, healthy deal wins, and a robust deal pipeline within the communication vertical.
The company is well invested in capturing opportunities from the expansion of 5G value chain across networks and IT services from both telecom service providers and enterprises. The company’s investments and multiple small acquisitions for enhancing capabilities in newer areas have resulted in consistent deal flows within the enterprise segment.
We assume Tech Mahindra will still generate higher free income (FCF) within the coming years, which might increase dividend/buyback payouts.
