The brokerage house says that the challenges from the supply side are easing for Tech Mahindra. Strong deals are in the pipeline. The growth outlook looks good going forward.
There has been a decline in the shares of IT company Tech Mahindra today. The stock weakened today and reached a price of Rs 1443. Whereas on the day of Budget Day, the stock closed at a price of Rs 1506. In fact, the giant Tech Mahindra has presented the quarterly results. The company’s revenue has been better than expected, but EBIT margin has been weaker than expected. After the results, the brokerage house says that the challenges from the supply side are easing for the company. Strong deals are in the pipeline. The growth outlook looks good going forward. Different brokerage houses have advised investing in the stock with a target of Rs 2200. That is, 52 percent faster than the current price is estimated. However, some brokerages have also suggested sell or neutral.
Revenue better than expected
Brokerage house Emkay Global has given an investment advice in Tech Mahindra with a target of Rs 19000. The brokerage house says that the company’s revenue in the December quarter has been better than expected. There has been a growth of 4.1 percent on a quarterly basis. However, the EBIT margin has been weaker than expected. There has been a drop of 40bps on a quarterly basis and it has now come down to 14.8 per cent. Net New Deal has been strong. The deal pipeline is also healthy. Management expects the healthy deal momentum to continue like this. Management expects momentum to continue in revenue growth as well. Demand for digital engineering, cloud, data and analytical services will also benefit. The brokerage house has reduced the EPS estimate for FY22-24 by 1.9 per cent.
Take advantage of a strong deal
Brokerage house Morgan Stanley has given an overweight rating on Tech Mahindra and has set a target of Rs 2100 for the stock. Whereas Nomura has given a target of Rs 2200 while giving investment advice. The brokerage house says that the revenue has been as expected but margins and earnings per share are weaker than the estimates. Although the supply challenge is expected to ease in the near term, a strong deal pipeline will also benefit. On the other hand, brokerage house Motilal Oswal has given a target of Rs 1600, giving a neutral rating on the stock. Whereas UBS has given a target of Rs 1260 giving a sell advice.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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