Buy Tech Mahindra, target price Rs 2060: Axis Securities

Axis Securities has buy call on Tech Mahindra with a target price of Rs 2060. The current market price of Tech Mahindra Ltd. is Rs 1641. Time period given by analyst is one year when Tech Mahindra Ltd. price can reach defined target.

Tech Mahindra Ltd., incorporated in the year 1986, is a Large Cap company (having a market cap of Rs 161190.73 Crore) operating in IT Software sector.

Tech Mahindra Ltd. key Products/Revenue Segments include Software Services for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 11163.40 Crore, up 6.47 % from last quarter Total Income of Rs 10484.90 Crore and up 17.64 % from last year same quarter Total Income of Rs 9489.30 Crore. Company reported net profit after tax of Rs 1341.70 Crore in latest quarter.

Investment Rationale
The brokerage believes Tech M has a resilient business structure from a long-term perspective and multiple long-term contracts with the world’s leading brands. With depreciation in INR, lower travel cost, and lower on-site expenses, EBITDA margins are likely to expand in the near term. It recommends a BUY rating on the stock and assign a 25x P/E multiple to its FY24E earnings of Rs 82.6 per share which gives a TP of Rs 2,060 per share, an upside of 20% from the CMP.

Promoter/FII Holdings
Promoters held 35.67 per cent stake in the company as of 31-Dec-2021, while FIIs owned 35.36 per cent, DIIs 17.23 per cent.