Tech Mahindra Ltd. (TechM)|Q2FY15 Result Update | Solid revenue Performance: Maintain HOLD with upward revision in TP to Rs.2,531 from Rs.2151 :: IndiaNivesh

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Tech Mahindra Ltd (TechM) Q2FY15 performance was largely above INSPL
expectation; except net profit, which was slightly below our estimates. During
the quarter, $-revenues grew by 5.2% Q/Q to $900 mn (INSPL est: $887 mn). Rupee
revenue went up 7.2% Q/Q to Rs.54.8 bn [v/s INSPL est: Rs.53.7bn] driven by IT
(+7.3% Q/Q) and BPO services (+5.6% Q/Q). EBITDA margin during the quarter
stood at 20.0% (v/s INSPL est. of 20.0%). The 187 bps Q/Q expansion in EBITDA
margin was on back of favourable utilization and decline in the SG&A expenditures.
TechM reported net forex loss of Rs.459 mn (v/s gain of Rs.119 mn in Q1FY15).
Tax outgo in Q2FY15 was at Rs.2,807 mn (v/s Rs. 2,308 mn in Q1FY15), resulting
in tax rate of 27.8% (v/s 26.7% in Q1FY15). TechM reported minority interest of
Rs.80 [v/s Rs.29 mn in Q1FY15]. Net profit went up 14.1% Q/Q to Rs.7,196 mn
[v/s INSPL est Rs.7,513 mn]. Excluding forex, Adj.PAT grew by 23.7% Q/Q to
Rs.7,655 mn (v/s 6,188 mn in Q1FY15). Management sounded positive on overall
deal pipeline and expect strong momentum to continue. The total contract value
(TCV) signed during the quarter was $230 mn.

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