Emkay Global Financial has given Buy recommendation for Tech Mahindra with a target price of Rs. 1870 in its research report issued on Oct 25, 2021

Emkay Global Financial’s report on Tech Mahindra

Tech Mahindra’s Q2FY22 operating performance was better than expectations. Revenues grew 6.4% QoQ (7.2% CC) to USD1,473mn, led by Communication, Media & Entertainment (6.7%) and Enterprise (6.3%) verticals. EBITM remained flat QoQ at 15.2%. Net new deal wins were robust, with a TCV of USD750mn, split across CME (USD255mn) and Enterprise (USD495mn). The deal pipeline remains healthy, and management expects healthy deal win momentum to continue in H2 as well. Management remains confident of sustaining revenue growth momentum and EBITM in H2 on the back of broad-based demand, uptick in 5G-led spending, robust demand for digital engineering, cloud, data & analytics services, healthy deal intake, and deal pipeline.


We raise FY22-24E EPS by 1.3-2.6%, factoring in the Q2 beat and recently announced acquisitions. Maintain Buy with a revised Sep’22 TP of Rs1,870 at 25x Sept’23E EPS (23x earlier), reflecting higher medium-term growth assumptions (see Exhibit 15).

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