Buy Tech Mahindra: target of Rs 1100: Sharekhan

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Sharekhan's research report on Tech Mahindra

We assume Tech M would report revenue growth of 1.9% q-o-q in Q3 despite furloughs, led by strong growth in BFSI, retail and technology verticals, recovery in engineering division and strong Comviva seasonality. We believe total deal TCVs would remain in the range of its average quarterly deal TCVs of $400 million-$500 million in Q3FY2021; small sized deal pipelines are converting faster compared to large deal pipelines. Tech M is well placed to capture the opportunity arising from 5G adoption by telecom and enterprise clients; expect to deliver improved revenue growth (at high-single digit) in FY2022, at 15% EBIT margin.

Outlook

We maintain Buy on Tech Mahindra (TechM) with a revised PT of Rs. 1,110, given it is trading at an attractive valuation.

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