Tech Mahindra - 1QFY2018 Result Update - Angel Broking

For 1QFY2018 Tech Mahindra posted good set of numbers. The sales came in at US$1,138mn (US$1,127mn expected) v/s. US$1,131mn in 4QFY2017, a qoq growth of 0.6%. In Rupee terms, sales came in at Rs. 7,336cr (Rs. 7,262cr expected) v/s. Rs. 7,495cr in 4QFY2017, a qoq dip of 2.1%. On operating front, the EBIT margins came in at 9.4% (8.6% expected v/s. 8.2% in 4QFY2017, a qoq expansion of 117bps, mainly on the back of base effect. Consequently, the PAT came in at Rs. 798cr (Rs. 624cr expected) v/s. Rs. 588cr in 4QFY2017, a qoq growth of 35.8%. We maintain our Buy rating on the stock.

Result highlights: The sales came in at US$1,138mn (US$1,127mn expected) v/s. US$1,131mn in 4QFY2017, a qoq growth of 0.6%. In Rupee terms, sales came in at Rs. 7,336cr (Rs. 7,262cr expected) v/s. Rs. 7,495cr in 4QFY2017, a qoq dip of 2.1%. The sales growth during the quarter was driven by USA, which constituted 46.8% of sales in 1QFY2018 v/s. 45.1% in 4QFY2017, while ROW dipped to 23.4% of sales in 1QFY2018 v/s. 25.3% of sales in 4QFY2017. On operating front, the EBIT margins came in at 9.4% (8.6% expected) v/s. 8.2% in 4QFY2017, a qoq expansion of 117bps, mainly on the back of base effect. Consequently, the PAT came in at Rs. 798cr (Rs. 624cr expected) v/s. Rs. 588cr in 4QFY2017, a qoq growth of 35.8%.

Outlook and valuation: We expect a CAGR of 8.0% and 7.2% in USD and INR revenue respectively over FY2017-19E. The PAT is expected to grow at a CAGR of 8.6% over FY2017-19E. We maintain our Buy rating on the stock with a Target Price of Rs. 533.

Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.407.1 as compared to the previous close of Rs. 401.9. The total number of shares traded during the day was 314251 in over 3921 trades.

The stock hit an intraday high of Rs. 408.2 and intraday low of 400.8. The net turnover during the day was Rs. 127393173.

Source : Equity Bulls

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