MOSL: TECH MAHINDRA (Buy)-Betting on mega trends

​TECH MAHINDRA: Betting on mega trends

(TECHM IN, Mkt Cap USD7.5b, CMP INR496, TP INR570, 15% Upside, Buy)

We attended the TECHM Analyst Day in Pune, where the company highlighted its 3-4-3 strategy, the various investments and partnerships it has made to propel it and demonstrated multiple solutions in areas that it is betting on. Appended below are our key takeaways from the event:

• 3-4-3 for all industries: TECHM has identified 3 mega trends – [1] explosion of connected devices, [2] power of new technologies and [3] exponentiality of content consumption to ride on which it is placing 4 bets – [1] integrated digital customer experience, [2] connectedness through IoT, [3] software transformation and [4] network-of-the-future; with the 3 objectives – [1] run better, [2] change faster and [3] grow greater. The above strategy applies to all of the key verticals that it is present in.
  
• Aligning with industry transformation in Communications: TECHM has seen a notable slowdown in its Communications portfolio led by the changing face of the industry. Revenue pressures faced by telcos, their changing identities through varied acquisitions and the share change between incumbents and digital carries have all contributed to this. While TECHM is a partner to all major CSPs worldwide and has seen strong growth in the number of its high value accounts (35 in FY18 versus 21 in FY15), it has made several investments in line with its 3-4-3 strategy. Acquisitions of BIO and Pininfarina and partnerships in the areas of IoT, microservices, AI and networks have been accelerating business transformation for CSPs.