Tuesday, October 20, 2009

[Investors Please Listen] Tech Mahindra Q2FY10 Result Update ; In line results; Cut rating one notch to HOLD ; Target: Rs 915

Tech Mahindra

 

In line results; Cut rating one notch to HOLD


HOLD

 

CMP: Rs 941                          Target Price: Rs 915


TechM reports revenues of US$ 237 mn(+3.9% QoQ) marginally below our estimates of US$ 240 mn. Operating margins expanded by ~40 bps sequentially to 25.6% (V/s our expectations of ~110 bps increase) driven by lower revenues and impact of (1) wage increments (implemented with retrospective effect from Q2FY10 start and (2) lower pricing from top client.

Net profits at Rs 1695 mn (+29% QoQ) met estimates driven by higher than expected other income.

Revenues from top client were flat in reported currency (however declined by ~5% QoQ, marking the 5th successive quarter of revenue decline). Co indicated that it expected revenues/volumes from top client to stop decline going forward. Growth outside of non top client was credible for the 2nd quarter in a row. 

Up standalone EPS estimates by ~11%/18% for FY10/11 to Rs 49.1/56 (V/s Rs 44.3/Rs 47.6 earlier) driven by increase in revenue estimates and savings on interest costs (note ~9% EPS revision for FY11 driven by savings on interest costs)

Cut rating one notch from ACCUMULATE to HOLD with a revised target price of Rs 915 as we believe valuations are full with Tech M trading at ~15xadjusted FY10E EPS/12.6xadjusted FY11E EPS of Rs 41.1/Rs 48 respectively. Key risk to our call emanate from (1) sale of L&T's 7% stake in Satyam at a price higher than today's market price and (2) INR depreciation. 


--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.

You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---

No comments:

Blog Archive

Life Insurance | Health Insurance | Auto Insurance


Investors Please Listen !

 
More than 100 kinds of Insurance products from more than
20 companies under one roof.



Call: 9818269396 
investorspleaselisten@in.com
www.investorspleaselisten.blogspot.com

 

 

Safe Harbor:

The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
Powered by Olark
Advertising Learn to Invest