Tech Mahindra Ltd. | Q3FY15 Result Update | In-line performance: Maintain HOLD with upward revision in TP to Rs.2,996 from Rs.2,629 ::IndiaNivesh

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Tech Mahindra Ltd (TechM) Q3FY15 performance was largely in-line with INSPL expectation. During the quarter, $-revenues grew by 2.7% Q/Q to $924 mn (INSPL est: $920 mn). Rupee revenue went up 4.8% Q/Q to Rs.57.5 bn [v/s INSPL est: Rs.56.9bn] driven by IT (+4.6% Q/Q) and BPO services (+7.1% Q/Q). EBITDA margin during the quarter stood at 20.2% (v/s INSPL est. of 20.0%). TechM reported net forex loss of Rs.356 mn (v/s Rs.459 mn in Q2FY15). Tax outgo in Q3FY15 was at Rs.2,512 mn (v/s Rs. 2,807 mn in Q2FY15), resulting in tax rate of 24.4% (v/s 27.8% in Q2FY15). TechM reported minority interest of Rs.31 [v/s Rs.80 mn in Q2FY15]. Net profit went up 8.0% Q/Q to Rs.7,769 mn [v/s INSPL est Rs.7,806 mn]. Excluding forex, Adj.PAT grew by 6.1% Q/Q to Rs.8,125 mn (v/s Rs.7,655 mn in Q2FY15). Management sounded positive on overall deal pipeline and expect strong momentum to continue. During the quarter, board approves 1:1 bonus and 2:1 stock split. The company also announced wage hike of ~4.0%/2.5% for onsite and offshore employees. TechM board also approved merger of Mahindra Engineering Services (MES) and acquisition of Lightbridge Communications Corporation (LCC) during the quarter. The total contract value (TCV) signed during the quarter was $220 mn.

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