Tech Mahindra: Upside cap in Tech Mahindra after Q2 show: HDFC Securities | Tech US News

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The IT major’s Q2 performance was in line with Street estimates, but after the September quarter results, domestic brokerage firm HDFC Securities saw a limited gain on the counter of just over 2% with a target price of Rs 1,100.

The large-cap counter performed in line with estimates on both the revenue and margin fronts. Deal closures were soft during the quarter, as the outlook for new total contract value (TCV) of $70-$100 crore was maintained, however, given the spread of select deals in Q3. Is.

In addition, within business segments the company’s Business Process Service (BPS) segment led growth. Telecom business as well as Enterprise business saw QoQ CC growth of 3.1% and 2.8% respectively.

The brokerage said it grew USD revenue by +10.3/9.2/9.7%, with +10.2/9.5/10.4/% and enterprise growth of +10.3/9.0/9.2, respectively, over FY23/24/25E. A percentage has been considered. . EBITM is estimated at 12.1/14.2/14.3% in the same period.

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The growth outlook for Tech Mahindra is based on pipeline commentary, enhanced services portfolio (design, engineering and consulting) + acquisition synergies, and 5G-related spending and M&E driving deals in TechM’s CME vertical, Securities said. Hence, the brokerage maintains an add rating on the counter with a target price of Rs 1,100 at 15x Jun-24E EPS (10Y average at 14.5x).

While improved payout and FCF generation (at 15x FY24E) will support valuation, the brokerage added.

In the past one year, shares of Tech Mahindra have rallied more than 27%, and on a year-to-date basis, nearly 40%.

(Disclaimer: Recommendations, advice, opinions and views given by experts are their own. They do not represent the views of Economic Times)

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