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Research
Tech Mahindra - Q3FY21 First Cut - ICICI Direct
Posted On : 2021-01-31 12:50:27( TIMEZONE : IST )
(CMP: Rs. 962, MCap: Rs. 93,048 crore)
Tech Mahindra (TechM) reported healthy set of Q3FY21 numbers. The company's revenues increased by 2.8% QoQ in constant currency terms (above our estimate of 1.6% QoQ in CC terms) mainly led by 4.5% QoQ growth in communication revenues and 2.7% QoQ growth in Enterprise revenues. Within enterprise the growth was driven by Manufacturing (up 4.7% QoQ) and Retail, Transport & Logistics (up 8.9% QoQ). In terms of geography the growth was led by Europe (up 7.5% QoQ) and Rest of the World (up 5.0% QoQ). The company also reported healthy expansion in EBITDA margins (up 156 bps QoQ to 19.6%) mainly led by higher utilisation and gross margin expansion. The company's order book improved by 8.1% QoQ to US$455 million mainly led by 64% increase in enterprise order book offset by 50% decline in Telecom order book.
Q3FY21 Earnings Summary
- The company's revenue increased by 2.8% QoQ in constant currency. US$ revenues increased by 3.4% QoQ to $1,308.7 million (above our estimate of 2.0% QoQ growth to $1,290.7 million)
- Rupee revenues increased by 2.9% QoQ to Rs. 9,647.1 crore (vs. our Rs. 9,525.4 crore estimate)
- EBITDA margin increased by ~156 bps QoQ to 19.6% (vs. our estimate of 18.2%) mainly driven by 148 bps QoQ increase in gross margins
- Reported PAT was up 23% QoQ at Rs. 1,310 crore (above our estimate Rs. 1,117.4 crore) mainly due to higher operating margins and higher other income
The company has shown healthy growth in revenues and better performance at margin level. This coupled with improvement in order book prompt us to be positive on the stock. We would be revisiting our estimates and target price shortly.
Shares of TECH MAHINDRA LTD. was last trading in BSE at Rs.961.65 as compared to the previous close of Rs. 982.55. The total number of shares traded during the day was 125411 in over 6617 trades.
The stock hit an intraday high of Rs. 995.45 and intraday low of 954.9. The net turnover during the day was Rs. 122694025.
