Tech Mahindra, Taking advantage of connected world :: ICICI Securities, PDF link

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Wins rates, participation improving post sales organisation rebuild…
TechM highlighted that rebuilding of sales organisation including creation
of large deals team in enterprise business has helped improve win rates
especially in its key North American market. Large deal TCV is up 75%
while LTM new logo TCV is up 90% YoY. The company is also leveraging
its telecom expertise in winning deals wherein win rates haves improved
50% while pipeline is up 5x partially helped by strengthening market
reach (focus on newer markets such as Saudi Arabia, New Zealand and
South Korea). Mining has improved with top 100 revenue/customer
metric growing 14% YoY. Going ahead, TechM sees demand uptick in
automation deals in manufacturing; payments, digital banking, mobility,
fraud analytics, risk and compliance deals in banking and efficiency
improvement deals in retail, CPG, healthcare & travel & logistics vertical.
Rising opportunities in network services business…
TechM noted KPN deal has stabilised after successful execution &
participation in similar deals may rise going ahead. Noticeably, it expects
opportunities in network services market to outgrow that of IT services
led by opex pressure, network consolidation & data demand.
Investment indications by communication service providers bode well...
Communication business commentary was encouraging as TechM saw
first signs of network investments. Newer opportunities are arising as
communication service providers challenged by opex spends are
investing in consumer centric engagements. TechM highlighted that
contribution of core (OSS/BSS) spends to segmental revenue has
reduced to 71% vs. 100% three years ago driven by continued traction in
consumer and business centric engagements around digital services, data
analytics and product platforms.
Raising target price on EPS upgrade and multiple expansion
We estimate TechM will report revenue, earnings CAGR of 16%, 11 over
FY14-16E (average 19.9% EBITDA margins in FY15-16E), vs. 13%, 19%
reported during FY08-13 (average 21.9%), driven by order bookings and
large deal ramp-ups. We now value TechM at 16.9x its FY16E EPS of
| 172 and revise our target price to | 2900 vs. | 2630 earlier.

LINK
http://content.icicidirect.com/mailimages/IDirect_TechM_CoUpdate_Nov14.pdf