Global brokerages raise target price on Tech Mahindra post Q2 results; sees up to 24% upside
Global brokerage firms such as Morgan Stanley, CLSA, Citi, Macquarie, and JPMorgan raised their respective 12-month target price on Tech Mahindra post Q2 results.
Global brokerage firms such as Morgan Stanley, CLSA, Citi, Macquarie, and JPMorgan raised their respective 12-month target price on Tech Mahindra post Q2 results.
The most aggressive target price was put out by Morgan Stanley which remains overweight on Tech Mahindra but raised the target to Rs 1900 from Rs 1670 earlier which translates into an upside of about 24 per cent from Rs 1524 recorded on 25 October.
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“The company delivered a broad-based revenue surprise, good deal win momentum, & resilient margins in 2H. Earnings Growth gap has been narrowing with peers, and improved capital allocation should drive further re-rating,” said the note.
The information technology company reported a 1 per cent QoQ decline in the consolidated profit at Rs 1,339 crore for the quarter ended September 30, 2021. It had posted a profit of Rs 1,353 crore in the previous quarter ended June 30, 2021.
Tech Mahindra’s consolidated PAT (profit after tax) grew by 25.8 per cent YoY in the July-September quarter of FY22, while the revenue jumped on both QoQ and YoY basis that is up 6.7 and 16.4 per cent respectively to Rs 10,881 crores in Q2FY22.
Its revenue from operation in the reported quarter rose 6.7 per cent to Rs 10,881 crore as against Rs 10,198 crore posted in the previous quarter.
In dollar terms, revenue came in at $1,47.3 crore, up 6.4 per cent QoQ, as against $138.4 crore posted in the previous quarter. EBIT rose 6.8% QoQ to Rs 1,651 crore as against Rs 1,546 crore posted in the previous quarter. The margin remained flat at 15.2%.
This growth is Tech Mahindra's highest sequential growth in a decade. The company board announced a special dividend of Rs 15 per share.
The IT major has announced the acquisition of 100% stakes in the California-headquartered Infostar LLC (Lodestone) for a total consideration of up to $10.5 crore including earnouts.
Here’s what top global brokerages recommend:
CLSA: Outperform| Target raised to Rs 1720 from Rs 1600
CLSA maintains an outperform rating on Tech Mahindra post Q2 results and raised its target from Rs 1720 from Rs 1600 earlier.
The company reported well-rounded 2Q results. It raised FY22/23 EPS estimates 1.4%/1.9%. The risk-to-reward ratio is favourable at 21x FY23CL EPS, despite a 35 per cent rally seen in the last 3 months.
CITI: Buy| Target raised to Rs 1765 from Rs 1655
Citigroup maintains its buy rating on Tech Mahindra post Q2 results but raised its target price to Rs 1765 from Rs 1655 earlier.
The global investment bank raised FY22E-24E EPS estimates by 2-3%, and the target multiple to 25x Sept23 (earlier 24x).
With a favorable outlook/commentary for the communication vertical, the company looks well placed in FY23E.
Macquarie: Outperform| Target raised to Rs 1980 from Rs 1940 earlier
Macquarie maintain its outperform rating on Tech Mahindra post Q2 results, but raised its target price to Rs 1980 from Rs 1940 earlier.
Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.
09:41 AM IST