Tech Mahindra jumps on US acquisition; here's what experts say

NEW DELHI: Shares of Tech Mahindra jumped over 2 per cent in Tuesday’s trade after the company told exchanges that its investment committee approved the proposal to acquire the CJS Solutions Group LLC, through a US arm. Many foreign brokerages have maintained positive view on the stock, with a target price of up to Rs 550 apiece.

The stock rose 2.13 per cent to hit a high of Rs 509.90 on BSE.

Credit Suisse, which has a target of Rs 550 on the stock said that the acquisition will help TechM scale-up the healthcare vertical. It also sees cross-sell synergies.

“Find this to be an attractive acquisition, given that it is a complementary fit,” the brokerage said, adding that valuation seems reasonable.

Morgan Stanley noted that HCI Group works with many US top hospitals and, hence, it expects TechM to cross-sell other services. This brokerage has a target of Rs 545 on the stock.

Kotak Securities said that acquisition of HCI at nearly 12 times trailing twelve months EBITDA will be EPS neutral.

“Recovery in telecom and margin expansion underpin positive view,” the brokerage which has a target of Rs 510 on the stock said.

The company made the announcement post market hours of Monday.