with a market valuation of 1,02,551.50 crore, Tech Mahindra Limited is a large-cap company engaged in the IT industry. The trading of this stock of the IT giant ended today 1,054.00 per piece, up 0.11% from previous close 1,052.85. The stock reported total volume during its trading session of 2,531,080 shares, compared to the 20-day average volume of 2,261,850 shares. Tech Mahindra to pay special interim dividend 18 per share soon and posting its Q2 results, research analysts across several companies have given buy call ratings to the stock.
The company in a stock exchange filing stated that its Board of Directors has declared “Special Dividend of Rs.18/- per equity share of Rs.5/- each i.e. 360% of face value. Members entitled to receive Special Interim Dividend” 10th November, 2022 has been fixed as the record date for determining the appear as beneficial owners of the shares on Thursday, November 10, 2022.”
In Q2FY23, the company’s revenue reached 13,129 crore; Up 3.3% QoQ and 20.7% YoY. EBITDA stood on 1,984 crore; 5.5% QoQ up, 0.6% YoY down. Company declared consolidated PAT of 1,285 crore; 13.6% QoQ up and 4.0% YoY down.
CP Gurnani, Managing Director and CEO, Tech Mahindra, said, “We continue to focus on being flexible and agile to ensure long-term value for our people, customers, partners and society at large. As the situation evolves and supply-side challenges continue, we will strengthen our differentiated offerings through our integrated and new-age solutions to help customers in their transformation journey.”
Rohit Anand, Chief Financial Officer, Tech Mahindra, said, “We have taken several targeted measures to achieve operational efficiencies and ensure long-term sustainable growth. While we continue to address dynamic market conditions, we continue to create value for our stakeholders. , through continued operational rigor, strong cash generation and prudent capital a/location. Additionally, we have also announced a special dividend of INR 18 per share in line with our capital/location policy.”
Following Tech Mahindra’s Q2 results, research analysts at broking firm ICICI Direct Research said in a note that “TechM’s share price has risen ~2.6x in the last five years (from ~~ From 489 in November 2017~ 1,071 levels in November 2022). We maintain our BUY rating on the stock. We value TechM 1240 i.e. 14x P/E at FY25E EPS.”
Healthy deal wins, traction in communications segment led by legacy modernization, 5G, customer care, automation, network and cloud to drive revenue, low margin portfolio restructuring, acceleration in Europe and demand improvement from lift and shift deals drive 11.6% CAGR Analysts to FY22-25E and margins are expected to recover on pricing, exit from low-margin business, lower sub-contractor cost and improved utilization are the top 3 key to future price performance of the stock are triggers.
Research analysts at broking firm Sharekhan said in a note that “Tech Mahindra (TechM) reported revenue of $1,638 million for Q2FY23; 0.3% qoq and up 11.2% YoY (2.9% qoq in constant currency terms) which is was in line with our estimates, led by strong performance from the Manufacturing, Technology and Retail verticals. This was offset by weak performance from the BFSI and CME verticals. EBITDA margin of 15.1% qoq 32Bps qoq was also in line with our estimates. EBIT margin at 11.4%, was up 32 bps qoq due to lower SG&A expenses and lower subcontracting costs partially offset by higher employee benefit costs and higher depreciation. Deal TCVs decreased 11% qoq to $716mn, while LTM deal TCVs increased 6% year-on-year to 3.2. Billion dollars which provides strong growth visibility. Management believes the technology vertical will be one of the key growth drivers as they build capabilities and are seeing better deal wins and momentum. Given that the margin headwinds from wage increases are better geographic mix, bigger deals and portfolios. Will be offset by levers such as olio pruning.
He further claimed that “On CMP, the stock is trading at a fair valuation of 18.1x/16.2x its FY2023E/FY2024E earnings estimates. We continue to prioritize TechM based on good deal wins and fair valuations. We maintain Buy rating on the stock with an unchanged price target (PT) of Rs. 1,220.”
Rupee appreciation and/or unfavorable cross-currency movement and/or disruption of local talent supply in the US will impact earnings and further, macro headwinds and a possible slowdown in the US are likely to dampen the pace of technology spending, these key risks stock analysts said.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
catch all business News, market news, today’s fresh news events and breaking news Updates on Live Mint. download mint news app To get daily market updates.