Neutral on Tech Mahindra, target price Rs 1095: Motilal Oswal

Neutral on Tech Mahindra, target price Rs 1095:  Motilal Oswal

Motilal Oswal has neutral call on with a target price of Rs 1095. The current market price of Tech Mahindra Ltd. is Rs 927.55.

Tech Mahindra Ltd., incorporated in the year 1986, is a Large Cap company (having a market cap of Rs 89564.04 Crore) operating in IT Software sector.

For the quarter ended 31-12-2020, the company has reported a Consolidated sales of Rs 9647.10 Crore, up 2.94 % from last quarter Sales of Rs 9371.80 Crore and down -.08 % from last year same quarter Sales of Rs 9654.60 Crore Company reported net profit after tax of Rs 1289.60 Crore in latest quarter.

Investment Rationale
As the business is running at elevated operational levers (utilization, employee expenses, etc.), we expect some normalization in EBITDA margin from 4QFY21. It upgrades FY21E/FY22E/FY23E EPS estimate by 11%/7%/10% as it considers strong margin beat during 3QFY21 and factor it in for FY22E/FY23E margins.

Promoter/FII Holdings
Promoters held 35.8 per cent stake in the company as of Dec 30, 2020, while FIIs held 39.1 per cent, DIIs 13.7 per cent and public and others 11.5 per cent.

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