Girish Pai

Nirmal Bang

Equity Bottom-Up

<p>4QFY21 Result Update</p>
<h2>Tech Mahindra</h2>
<h3>Weak 4Q but FY22 revenue outlook upped on 5G</h3>
<p>Tech Mahindra’s (TML) 4QFY21 performance of 0.7% QoQ CC revenue growth (2.5% our estimate) and 16.5% EBIT margin (16.1% our estimate) was weak. PAT was impacted by forex loss and higher tax rate. However, net new deal flow was strong at ~US$1bn (against average of ~US$390mnin in the first three quarters of FY21) and a repeat has been signaled in 1QFY22 and beyond, backed by highest order pipeline involving digital…</p>

<p>3QFY21 Result Update</p>
<h2>Tech Mahindra</h2>
<h3>On course to deliver on its FY22 guidance</h3>
<p>Tech Mahindra’s (TML) 3QFY21 performance of 2.8% QoQ CC revenue growth and 15.9% EBIT margin was ahead of our estimates, especially EBIT margin (1.5% and 14.9% were our estimates respectively on revenue growth and EBIT margin). Revenue growth may be a tad disappointing compared to heightened street expectations after an outstanding quarter by many of its larger peers. The net new TCV at US$455mn is good but still…</p>

<p>Analyst Meet Update</p>
<h2>Tech Mahindra</h2>
<h3>An upgrade cycle is likely in the offing</h3>
<p>Tech Mahindra’s (TML) analyst day yesterday delivered the following takeaways: (1) a pick-up in overall revenue growth to high single digits in FY22 with enterprise side leading with a double-digit number and communication vertical growing in mid-high single digits with no material revenue from 5G. This is on the back of higher large deal pipeline and deal flow. The medium term commentary hints at an acceleration as 5G…</p>

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<p>2QFY21 Result Update</p>
<h2>Tech Mahindra</h2>
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<h3>Margins upgraded; 5G B2C and Rakuten could drive further revenue upgrades</h3>
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<p>Tech Mahindra’s (TML) 2QFY21 performance was ahead of expectation, especially on EBIT margin. Commentary on margin in FY21 has shifted quite a bit over the last few quarters. In December 2019, at the analyst meet, TML was targeting ~15% margin in FY21. That was dropped when the pandemic hit and was shifted as the goal for FY22. In light of a significant margin surprise in…</p>
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<p>1QFY21 Result Update</p>
<h2>Tech Mahindra</h2>
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<p><strong>FY21 revenue growth trajectory hazy; margin picture bit clearer</strong></p>
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<p>Tech Mahindra’s (TML) 1QFY21 6.3% QoQ decline in revenue in CC terms (-6.7% in USD), was better than our estimate of -7.9%. 75% of the decline was because of demand and 25% because of supply side issues. Communication sector (40% of revenue, down 8.6% CC) led the decline while enterprise was down 5.4%. Enterprise likely benefited from further ramp of the Prudential deal. As expected…</p>
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India

Tech Mahindra Ltd. develops and markets computer software.  The Company markets software for telecommunications equipment manufacturers, telecom service providers, software vendors, and systems integrators.

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