Emkay Global Financial has given Buy recommendation for Tech Mahindra with a target price of Rs. 1930 in its research report issued on Jan 17, 2022
Emkay Global Financial’s report on Tech Mahindra
TechM has agreed to acquire a 100% stake in Com Tec Co IT Ltd (CTC), an IT solutions and services provider serving the insurance and financial services industries, for a cash consideration of EUR310mn, including earnouts (~4x EV/Sales on annualized CY21E sales). It is also acquiring a 25% stake in SWFT Technologies Ltd and Surance Ltd for EUR16.5mn and EUR3.5mn, respectively, with an option to acquire another 20% stake in the next two years.
Given the size of the acquisition (<2% of Tech Mahindra’s revenue), we do not expect any meaningful revision to our earnings estimates. We have a Buy rating on the stock with a TP of Rs1,930 at 25x Dec’23E EPS.