Tech Mahindra Ltd. share price target

Lopsided growth yet again as enterprise business disappoints Tech Mahindra's (TECHM) Mar'19 quarter was below estimates due to a disappointing performance from the enterprise business where a few large projects drew to a close and new contract signing was delayed. Enterprise revenue dipped 2.2% QoQ while communication revenue increased 4.4%. Management retained its FY20 growth outlook and is targeting flat to marginally better operating margins. We trim FY20/FY21 earnings estimates...

A contrasting year for revenues and margins: For FY19, TECHM's USD revenue grew 4.2% YoY, EBITDA increased 34% YoY and PAT was up 13% YoY. Including the buyback of INR19.6b, the total payout for the year stood at 74.5%. For 4QFY19, USD revenue grew 1.9% YoY (our estimate: +3.5% YoY), EBITDA increased 16% YoY (our estimate: 23%) to INR16.4b, while PAT declined 7% YoY (our estimate: -1% YoY) to INR11.3b. 4QFY19 dragged by Enterprise: Communications (42.7% of revenue) surprised positively with sequential growth of 4.4% versus our estimate of...

Tech M had an impressive FY19 with EBITDA margins expanding by ~290bps Change in Estimates | Target | Reco YoY, strong TCV growth of 43% YoY to US$400mn in Q4FY19. Digital services grew 41% YoY and stands at 31% of the total revenues in FY19. Overall, Tech...

TechM delivered healthy performance in Q3FY19 with revenue growth of 3.5% QoQ in USD terms (+4.3% QoQ in CC terms), ahead of our estimate. EBITDA margin expansion continued to beat estimate with an improvement of 50...

21 February 2019 INR19.56b (<10% of net worth) was decided after taking stock of the future needs of capital for the business. It is also tax efficient for the company. This buyback is not in lieu of dividend. However, the company would not like to retain too much excess cash. TECHM will go for a Dividend + Buyback strategy in the future based on the need of the business. In the past, every time TECHMs net cash (including investments) has exceeded or come close to INR40b, there has been some allocation toward inorganic growth. That did not happen this time around, and the net cash position increased to INR65b in the last four quarters. The quantum of buyback brings total net cash down to that range at INR45b. If TECHM pays same dividend as last year (INR14/share), it will bring net cash down to INR30-35b.

Tech Mahindra Ltd. reported healthy broad based growth in Q3 FY19. Tech Mahindra reported consolidated revenue growth of 3.5% on QoQ and 4.3% on constant currency basis. EBITDA margin expanded 300 bps on YoY basis and 50 bps on QoQ basis.

Maintain BUY with a TP of Rs 880 based on 15x Dec-20E earnings. Tech Mahindra delivered healthy performance both on revenue and margin front. Revenue stood at USD 1,261mn (+3.5% QoQ, +4.3% CC), ahead of our est of USD 1,244mn. Enterprise (59% of rev) grew 4.2% QoQ led by Digital (33% of rev, +10% QoQ) and recovery in Manufacturing and BFSI. Management expects Enterprise segment to grow at ~10% CC YoY led by increased Digital adoption and strong TCV wins (USD 490mn in last two quarters).

Tech Mahindra (TechM) reported a healthy performance on all fronts in Q3FY19 with 4.3% constant currency revenue growth (vs. our estimate of 3%) and 50 bps margin expansion to 19.3% US$ revenues grew 3.5% QoQ to $1261 million (vs. our estimate $1248.2 million) mainly led by growth in telecom (2.5% QoQ), manufacturing (5.6% QoQ) and BFSI (2.7% QoQ) On the margin front, the EBITDA margin increased 50 bps QoQ to 19.3% led by 6.2% QoQ decline in SG&A; expenses and benefit of...

5 February 2018 grew 28% YoY (our estimate of flat growth) to INR12.0b in 3QFY19. Gross margin shrank 100bp QoQ to 33%. However, EBITDA margin expanded 50bp QoQ to 19.3% (above our estimate of 18.9% by 40bp), PAT increased 27.7% YoY to INR12.0b, higher than our estimate of INR9.38b (28% beat), led by lower forex losses (INR0.8b v/s our estimate of INR1.9b) and lower ETR (17.8% v/s our estimate of 25%).