Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tech Mahindra Ltd. — Top client concerns reemerge
Estimate Change
Uncertainty from top client; Retain Neutral
Post 1Q results we retain our Neutral rating and PO of Rs740. See downside risk
to earnings from top client BT’s plan to put significant portion of India IT services
business for tender. BT contributes 40% to revenues and we currently have
assumed flattish growth from BT in the near term. Our consolidated earnings
including proportionate share from its subsidiary Satyam stands at Rs62 (FY12E)
and Rs68 (FY13E).
Muted 1Q rev growth; Margins disappoint
1Q USD revs grew by 4% QoQ, 1% lower than BofAMLe and was led by 2%
volume growth and cross currency gains. EBIT margins declined 135bps QoQ to
16% vs. BofAMLe 17% driven by lower utilization and transition costs in Africa
BPO business. Recurring PAT declined 13% QoQ, 7% ahead of our est, led by
higher forex gains. With salary hikes effective July, margins likely to be under
pressure in 2Q as well.
Muted BT growth; Non BT grew 5% QoQ
Revenue from top client BT was flattish and in line with management guidance of
GBP70-72mn for the quarter. Non BT revenues (~60% revs) grew by 5% QoQ led
by strong growth in AT&T (20% revs) and emerging markets. Management
expects traction to continue given recent BPO win from a large domestic telco.
Top client issues occur again
Management indicated that its top client BT has called for fresh tender for
significant pieces of its India business. Consequently its earlier assumption of a
run rate of GBP70-72mn per quarter from BT may not hold true. While TML is the
largest offshore provider for BT and has a strong dominating position, the rebid
could lead to fresh round of price cuts and creates uncertainty in our view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tech Mahindra Ltd. — Top client concerns reemerge
Estimate Change
Uncertainty from top client; Retain Neutral
Post 1Q results we retain our Neutral rating and PO of Rs740. See downside risk
to earnings from top client BT’s plan to put significant portion of India IT services
business for tender. BT contributes 40% to revenues and we currently have
assumed flattish growth from BT in the near term. Our consolidated earnings
including proportionate share from its subsidiary Satyam stands at Rs62 (FY12E)
and Rs68 (FY13E).
Muted 1Q rev growth; Margins disappoint
1Q USD revs grew by 4% QoQ, 1% lower than BofAMLe and was led by 2%
volume growth and cross currency gains. EBIT margins declined 135bps QoQ to
16% vs. BofAMLe 17% driven by lower utilization and transition costs in Africa
BPO business. Recurring PAT declined 13% QoQ, 7% ahead of our est, led by
higher forex gains. With salary hikes effective July, margins likely to be under
pressure in 2Q as well.
Muted BT growth; Non BT grew 5% QoQ
Revenue from top client BT was flattish and in line with management guidance of
GBP70-72mn for the quarter. Non BT revenues (~60% revs) grew by 5% QoQ led
by strong growth in AT&T (20% revs) and emerging markets. Management
expects traction to continue given recent BPO win from a large domestic telco.
Top client issues occur again
Management indicated that its top client BT has called for fresh tender for
significant pieces of its India business. Consequently its earlier assumption of a
run rate of GBP70-72mn per quarter from BT may not hold true. While TML is the
largest offshore provider for BT and has a strong dominating position, the rebid
could lead to fresh round of price cuts and creates uncertainty in our view.
No comments:
Post a Comment