Credit Suisse maintained its outperform rating on Tech Mahindra while Jefferies maintained its buy rating on Tech Mahindra with a target price of Rs 880
Most brokerage firms maintained their rating on Tech Mahindra after the IT major reported 8.8 percent fall in its fourth quarter consolidated net profit at Rs 1,126.6 crore against Rs 1,230.8 in the quarter ended December 2018.
The figure above includes profit attributable to shareholders of the company and non-controlling interests.
Operating revenue of the company was up at Rs 8,892.3 crore from Rs 8,054.5 crore from a year-ago period.
The company's dollar revenue stood at $1,267.5 million in Q4FY19. The dollar profit of the company slumped 13.7 percent YoY to $162.3 million.
Here’s what global brokerage firms recommend on Tech Mahindra post Q4 results:
Credit Suisse: Outperform| Target cut to Rs 910 from Rs 950 earlier
Credit Suisse maintained its outperform rating on Tech Mahindra but slashed its target price to Rs 910 from Rs 950 earlier.
The results were a mixed bag although the telecom business looked good, it said. The global investment bank does not expect any immediate impact from the Huawei ban.
Credit Suisse slashed its EPS estimate by 3 percent. The management expects to hold margins steady in FY20, as the headline numbers were a tad weak, and the profit is 5 percent below estimates.
CLSA: Outperform| Target: Rs 810
CLSA maintained its outperform call on Tech Mahindra with a target price of Rs 810. The telecom segment grew for the third consecutive quarter but the decline in margins was largely driven by FX headwinds.
The telecom segment has improved and CLSA expects it to be a prime mover in FY20. The global investment bank slashed revenue estimate by 0.5 percent, raising margin by 50 bps. It slashed EPS estimate for FY20-21 by 0.5-1 percent.
Jefferies: Buy| Target: Rs 880
Jefferies maintained its buy rating on Tech Mahindra with a target price of Rs 880.
The growth rate disappointed but FY20 guidance suggests that the risk-reward is favourable. The global investment bank slashed estimates for FY20-21 slightly to reflect the lower revenue base.
The stock trades at 14/12x FY20/21 P/E, assuming stable margin and revenue growth of 7.5/9 percent. Tech Mahindra offers good risk-reward at current levels.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
