Prabhudas Lilladher has given Buy recommendation for Tech Mahindra with a target price of Rs. 1138 in its research report issued on Feb 01, 2021

Prabhudas Lilladher’s research report on Tech Mahindra

TechM reported revenue of US$1308.7mn up 3.4% QoQ USD above our and street estimates. (Ple: 2%, Cons: 2.5%). Revenue growth was led by BPO that grew by 11.5% QoQ. IT services grew by 2.5% QoQ USD. EBIT margins surprised us positively at 15.9% (Ple & Cons:14.2%) led by record high utilization, improved offshoring, delivery excellence. Management guided that margins can be maintained at 14-15% levels in FY22. We have estimated 14.9%/14.8% EBIT margin for FY22/23E.


We continue to value TM at 17X on Mar-22 EPS of INR 67 to arrive at a changed TP of INR 1138 (Old TP: 1099) with revenue & earnings CAGR of 10%/11% respectively. TM is currently trading at 15.4X/14.4X at EPS of INR 62.4/66.9 on FY22/23E respectively. Maintain Buy.