Tech Mahindra Ltd. share price target

USD revenue at $1,032mn (+0.9% qoq) inline with street but higher than our expectation (+0.1% qoq). Positive cross currency impact of 50bps. EBITDA Margins at 14.9% - decline of 185bps qoq significantly below our and street expectations of 15.8%. Margins were impacted by visa cost (-100bps) and seasonally weak Comviva business (-180bps) partly negated by operational efficiencies. Margins have now fallen by 530bps over the last six quarters. Geographies: US grew 5.6% qoq while Europe remained flat. RoW declined by -7% qoq. Verticals: Telecom continued to be weak declining by -2.5% qoq. BFSI grew 7.5% qoq,...

In our view, there is nothing enthusing about Tech Mahindra's 1QFY17 financial report. From a revenue perspective, its revenue from its key vertical i.e. Telecom declined 2.5% qoq in USD terms owing to weak seasonality. Manufacturing clocked a healthy 6.8% qoq growth, though aided by Pininfarina consolidation (one month contribution of US$9mn), while BFSI (+7.5% qoq) and Retail, Transport & Logistics (+5.8% qoq) also clocked encouraging performances. On yoy basis, BFSI, Manufacturing & Others three verticals which account for ~37% of Tech Mahindra's total revenue recorded double digit growth of 17.8%, 10.4% & 20.6%, respectively in 1QFY17. Thus, more...

aided by sharp increase in treasury income. Revenue growth of 0.9% QoQ, including +50bps benefit of cross currency, was also higher than our forecast. However, EBIT margin of 12%, 160bps QoQ, missed our forecast impacted by higher than expected QoQ decline in Comviva's business (on account of seasonality). In Q1FY17, TECHM secured new deals with TCV of ~US$300mn following ~US$1.3bn worth deals secured in FY16. The no. of US$20m+ clients increased by 2 QoQ to 42 vs. 36 in Q1FY16....

Tech Mahindra posted sales of Rs6,884cr for 4QFY2016 (V/s Rs6,701cr in 3QFY2016), which is a qoq growth of 2.7%. In US$ terms, sales came in at US$1,023mn (V/s our expectation of US$1,021mn), a qoq growth of 0.8%. In terms of geographies, growth was driven by ROW (accounted for 24.7% of sales V/s 23.2% of sales in 3QFY2016). In terms of i..

XX The consideration for the deal is at an EV of US$163mn (112mn): (1) upfront consideration of US$93mn (64mn), (2) deferred consideration of US$24mn (16.3mn) and (3) loan retirement of US$25mn (17.1mn) XX It will also roll-over 7.6% equity of Target Group to CY20E owned by key employees and to be paid as deferred consideration capped at US$44mn (30mn). The deal is expected to be completed by end of 2QFY17E XX The deal is valued at 11.5x FY17E EV/EBITDA and EV/Sales of 2.7x, factoring revenue growth of 18% (management outlook at 18-20%) and EBITDA margin of 16%...

In Addition, Target's management is rolling over 7.6% of their equity value into the company which will be paid out in 2020 as second deferred payment, equity value of which will depend upon the company's performance between...

ICICI Securities Ltd | Retail Equity Research Tech Mahindra (TechM) reported Q4FY16 earnings which were generally in line with our estimates...

hence assumed cancelled. Of the remaining three, the company has already won one andexpectstocloseone/twooftheremaininginthenextfewquarters. Communicationsbusinessisexpectedtobevolatileoverthenexttwoquartersdueto...

TECHM posted US$1,023mn revenue up 0.8% qoq (1.3% qoq in cc terms) in 4QFY16 v/ s1.2% qoq in 3QFY16). Growth continued to be largely led by Enterprise Division which grew 1.6% qoq while Communications Division was flat (LCC decline mitigated by favourable seasonality of Comviva in 4Q). LCC's annual revenue rate has declined to US$320mn as compared to US$400mn a year ago and the Management expects the trend to troughout from the current level. Its Management also highlighted improving business traction in Communication Division (ex-LCC). We expect this segment to post positive growth, going forward compared to negative single-digit growth in FY16 (strong non-network deal pipeline in Communications Division). Enterprise Division grew by 12.7% in cc terms in FY16 supported...

stock is trading at 12x FY17 and 10x FY18 P/E consensus' multiple. However, we believe these multiples are misleading. Despite the near certainty of the company reporting less than 5% organic revenue growth in FY16, consensus expects 11.8%/11.4% yoy growth in...