MOSL: TECH MAHINDRA (Buy)-Confidence on Communications continues to inch up
Tech Mahindra: Confidence on Communications continues to inch up
(TECHM IN, Mkt Cap USD10.6b, CMP INR750, TP INR900, 20% Upside, Buy)
We hosted Manoj Bhat, CFO of Tech Mahindra, in Mumbai where he shed some light on the industry environment and TECHM's outlook and strategic approach. Key highlights:
- Telecom is back on the growth trajectory due to multiple broad-based services deals. Action on the 5G rollout front - not as significant currently - is expected to accelerate CY20 onwards; lest there is positive disruption driven by some Service providers.
- Enterprise had a muted exit due to a couple of Healthcare deals spilling over into 1HFY20. This, combined with some near-term slowdown in Automotives (on weak macros) poses a challenge to mathematically achieving industry growth. Funnel of deals remain strong and conversions in 1HFY20 should improve the outlook.
- BPS has strong profitability and disproportionate growth is not a drag on margins. In recent quarters, even growth has turned around, and should remain high in FY20 as well.
Tech Mahindra Limited is engaged in the business of computer programming, consultancy and related services. The Company's segments include Information Technology (IT) Services and Business Processing Outsourcing (BPO). The Company operates in various sectors, including telecom business and enterprise solutions business. The telecom business provides consulting-led integrated portfolio services to customers, which are telecom equipment manufacturers, telecom service providers and IT infrastructure services, and BPO, as well as enterprise services (banking, financial services and insurance (BFSI), retail and logistics, and manufacturing, among others) of IT and IT-enabled services delivered through a network of various locations around the world. The enterprise solutions business provides IT services, including IT enabled services, application development and maintenance, consulting and enterprise business solutions, extended engineering solutions and infrastructure management services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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