For 1QFY2017, Tech Mahindra’s revenue came in at US$1,032mn V/s
US$1,027mn expected and V/s US$1,023mn in 4QFY2016, a QOQ growth of
0.9%, driven by USA (which was 49.0% of sales V/s 46.8% in 4QFY2016), while
ROW, constituting ~22.8% of sales V/s 24.7% in 4QFY2016 was a drag. On the
operating front, the EBIT margin came in at 12.0% V/s 12.3% expected and V/s
13.7% in 4QFY2016, QoQ dip of 161bp. Thus, the Adj. net profit came in at
Rs750cr V/s Rs816cr expected and V/s Rs858cr in 4QFY2016, a QoQ de-growth of
12.6%. We maintain our Buy.
Result highlights: The company posted sales of ( in US$ terms ), of US$1,032mn
V/s US$1,027mn expected and V/s US$1,023mn in 4QFY2016, a QoQ growth
of 0.9%, driven by USA (which was 49.0% of sales V/s 46.8% in 4QFY2016),
while ROW (constituting ~22.8% of sales V/s 24.7% in 4QFY2016) was a drag.
In terms of industries, Manufacturing and BFSI were the key drivers of the top-line
of the company. Manufacturing constituted ~18.1% of sales V/s 17.1% in
4QFY2016, while BFSI contributed ~11.3% of sales V/s 10.6% in 4QFY2016.
On the operating front, the EBIT margin came in at 12.0% V/s 12.3% expected
and V/s 13.7% in 4QFY2016, QoQ dip of 161bp. Thus, the Adj. net profit came
in at Rs750cr V/s Rs816cr expected and V/s Rs858cr in 4QFY2016, a QoQ
de-growth of 12.6%.
Outlook and valuation: We expect a CAGR of 10.6% and 12.8% in USD and
INR revenue respectively over FY2016-18E.The PAT is expected to grow at a
CAGR of 13.2% over FY2016-18E. We maintain our Buy on the stock.
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