Tech Mahindra Limited is a leading provider of digital transformation, consulting and business re-engineering services and solutions. It is a part of the $ 21 Billion Mahindra Group; a global federation of companies divided into 11 business sectors, providing insightful solutions at a global scale across 20 industries.
|Market Cap. (Cr.)||88459.58|
|52 Wk. high/low||929.30/470.25|
|Book Value (Rs)||245.49|
|Industry||IT – Software|
Share Holding Pattern %
|Non Promoter Corp.||0.74|
|Public & Others
Consolidated Revenue for fiscal 2020 was Rs. 36,867 Crore compared to Rs. 34,742 Crore in fiscal 2019, growth of 6.1%. The increase in revenue is due to increase in number of clients served & increase in business from these clients.
For fiscal 2020, revenue from Communications was 41.6% compared to 41.2% in previous year. Revenue from Manufacturing was 18.1% in fiscal 2020 compared to 20.2% in fiscal 2019.
Tech Mahindra invested in new-age technologies and entered disruptive partnerships. The concentration of revenue from communication came down and stands at 41.6% for FY20 versus 52% in FY16 lowering the risk of large portion of revenue coming from single segments.
Tech Mahindra’s operating margins came at 14.2 per cent in Q2FY21 compared to 10.1 per cent in Q1FY21, largely on the back of demand and supply recovery, improvement in utilisation rates, off-shoring and lower sub-contract rates. It has maintained the 15 per cent guidance band.
During the quarter Q2FY21, growth came from multiple verticals. Communication segment registered revenue growth of 3.2% in Q2FY21. Technology, media & entertainment registered revenue growth of 13.3% in Q2FY21. Banking, financial services & insurance registered revenue growth of 9.6% in Q2FY21. Management alluded that Manufacturing has now bottomed out and is expected to return on growth trajectory in the coming quarters. In case of Communications, deal signings have doubled from 1QFY21.
The company generates 17% of topline from cloud and is growing at 22%. Apart from capturing acceleration in digital technologies, the company’s focus on winning large deals will further boost revenues in coming years.
Tech Mahindra Limited is a leading provider of digital transformation, consulting and business re-engineering services and solutions. The industry powers critical healthcare, finance, and telecom services. This translates into revenue visibility of Rs. 400 crore per year. Tech Mahindra won deals worth Rs 421 million in Q2FY21.5G Opportunity for the company likely to arrive by FY22.The company expect recovery in telecom client base to normalize in the next 1-2 quarters. In the long term, we believe Tech Mahindra will be a key beneficiary of 5G opportunities. On performance front we expect company to report EPS of Rs.51.5 for FY22E, at CMP of Rs922 PE work out to be 17.9x. Hence, investors can buy the stock at CMP of Rs.922 for target price of Rs1150. Time frame should be 9-12 months.
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