Sharekhan's research report on Tech Mahindra
We assume Tech M would report revenue growth of 2.3% q-o-q in Q4 despite softness in the aero sub-segment, led by strong growth in BFSI; EBIT margin is likely to remain stable given cost-efficiency measures and higher offshoring. With the Telefonica deal ($300 mn-$400 mn), we expect the company’s total deal TCVs to be around 1.5x-2x higher in Q4 compared to its average quarterly deal TCVs of $400 million-500 million. Given strong deal wins in telecom, healthy deal pipeline in the enterprise segment, and strong demand across digital stack, the company is expected report strong revenue growth in FY2022E with margin improvement.
Outlook
We maintain Buy on Tech Mahindra (Tech M) with a revised PT of Rs. 1,150, given it is trading at an attractive valuation.
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