Prabhudas Lilladher has given Buy recommendation for Tech Mahindra with a target price of Rs. 1862 in its research report issued on Nov 12, 2021

Prabhudas Lilladher’s research report on Tech Mahindra

TechM aspires to achieve industry leading growth by investing in 4 big bets: -1) Connectivity (best invested in connectivity space), 2) Experience (CX deal bookings worth $567 Mn in H1FY22 with highest ever deal pipeline), 3) Cloud (Cloud has grown 2x YoY from $300mn to $600mn) and 4) Engineering. TechM’s Manufacturing, HiTech and BFSI verticals are trending towards $1Bn revenue in FY22. Investments in 5G are back with globally $130Bn invested in 5G core network. 5G for CSP and 5G for ecosystem has already started firing for TechM. 5G for Enterprise will grow in next 2 years. 5G revenue run-rate for TechM was ~USD 500 mn by Q2FY22. 20% of CME business is now 5G and 50% of all network services business is now 5G. 5G will enable sensor based connected world and drive new business models. 5G and 5G related business opportunity is expected to be $712 Bn by 2023.


Our DCF based target price for TechM is 1862 (implying target multiple of 18.5x on FY24 EPS). TechM is currently trading at 20X/18.5X earnings multiple on FY23/24 EPS of INR 75.8/82.5 on FY22/23E respectively, inexpensive. TechM has Revenue/EPS CAGR of 12.8%/12.8% over FY22-24. Maintain Buy.

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