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Tech Mahindra 1QFY2015 performance highlights and results update

August 7, 2014, Thursday, 18:08 GMT | 14:08 EST | 22:38 IST | 01:08 SGT
Contributed by Angel Broking


For 1QFY2015, Tech Mahindra posted sales of US$855mn, up 3.6% qoq. In CC terms the revenue growth was 2.9% qoq. The EBITDA margin for the quarter came in at 18.1% V/s 21.2% in 4QFY2014, a dip of 306bp qoq. The net profit came in at US$105mn, up 4.2% qoq. The utilization rate dipped to 72% V/s 74% in 4QFY2014; there was a marginal increase in the attrition rate, which moved from 15% in 4QFY2014 to 16% in 1QFY2015. In terms of geography, the growth was mainly driven by USA; in terms of verticals, all seemed to have grown equally. In rupee terms, the revenue grew by 1.3% qoq to Rs.5,122cr, while the PAT came in at Rs.631cr, up 2.7% qoq. We maintain our Buy rating on the stock with a target price of Rs.2,562.

Result highlights: For the quarter, the company posted sales of US$855mn, up 3.6% qoq. The EBITDA margin came in at 18.1% V/s 21.2% in 4QFY2014, a dip of 306bp qoq. The net profit came in at US$105mn, up 4.2% qoq. The utilization rate dipped to 72% V/s 74% in 4QFY2014; there was a marginal increase in the attrition rate, which moved from 15% in 4QFY2014 to 16% in 1QFY2015. In terms of geography, the growth was mainly driven by USA, while all verticals seemed to have grown equally. In rupee terms, the revenue grew by 1.3% qoq to Rs.5,122cr, while the PAT came in at Rs.631cr, up 2.7% qoq.

Outlook and valuation: The Management remains confident of growth from the non-British Telecom (BT) business with the company continuing to see a robust deal pipeline across geographies. We expect a CAGR of 13.7% and 13.0% in USD and INR revenue respectively over FY2014-16E. The PAT is expected to grow at a CAGR of 10.0% over FY2014-16. We maintain our Buy rating on the stock with a target price of Rs.2,562.

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