Add Tech Mahindra Ltd For Target Rs.1382 - Yes Securities
Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel
https://t.me/InvestmentGuruIndiacom
Download Telegram App before Joining the Channel
Mixed operating performance as it continues to face pressure on margin
Our view and valuation
Overall, it reported mixed performance as revenue was slightly above estimates; while margin was below expectation. It continues to face supply side challenges which has impacted the margin. However, improving employee pyramid led by fresher hiring, increasing utilization, higher offshoring trend and pricing action should support operating margin in FY23. Deal wins remain healthy as it reported deal win of $1bn in the quarter and that provides revenue growth visibility. It is expected to benefit from rising 5G related deal momentum as it remains highly dependent on telecom vertical(~40% of revenue); While the enterprise vertical seems to be getting traction led by BFSI and Technology verticals. We estimate revenue CAGR of 13.5% over FY22‐ FY24E with average EBIT margin of 14.8%
We maintain ADD Rating on the stock with revised target price of Rs 1,382 per share at 17x on FY24E EPS. The stock trades at PE of 14.8x on FY24E EPS.
Result Highlights
* Reported revenue of Rs 121.2bn( up 5.8% in INR terms, up 4.9% in USD terms). Communication vertical grew 4.1% QoQ in USD terms; Enterprise vertical grew 5.4% QoQ in USD terms. Communication ( CME) contributes 40.6% of revenue.
* EBIT margin decreased by 159 bps QoQ to 13.2% in the quarter on higher employee cost and higher D&A
* Deal booking momentum remained strong as it reported net new deal wins of $1.01bn compared to $704mn in Q3FY22.
* Number of active clients increased by 33 QoQ during the quarter compared to 68 addition in Q3FY22.
* Total headcount grew by 6,106( up 4.2% QoQ). Utilization was down 1 percentage points to 83%. LTM attrition broadly remained flat at 24%.
* Reported cash and equivalent of $1.14bn compared to $1.35bn as of Q3FY22.
* Receivable days improved by 4 days QoQ to 97 days
To Read Complete Report & Disclaimer Click Here
Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632
Above views are of the author and not of the website kindly read disclaimer
