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TECH MAHINDRA LTD.

NSE : TECHMBSE : 532755ISIN CODE : INE669C01036Industry : IT - Software House : Mahindra & Mahindra
BSE755.95-2.1 (-0.28 %)
PREV CLOSE ( ) 758.05
OPEN PRICE ( ) 760.50
BID PRICE (QTY) 0.00 (0)
OFFER PRICE (QTY) 755.95 (76)
VOLUME 30171
TODAY'S LOW / HIGH ( )753.00 765.95
52 WK LOW / HIGH ( )607.9 846
NSE756.45-1.5 (-0.2 %)
PREV CLOSE( ) 757.95
OPEN PRICE ( ) 761.00
BID PRICE (QTY) 0.00 (0)
OFFER PRICE (QTY) 756.45 (2518)
VOLUME 1184008
TODAY'S LOW / HIGH( ) 752.50 766.00
52 WK LOW / HIGH ( )607.15 846.5
AnalystEmailIdniharika@narnolia.com
AnalystNameNiharika Ojha
BSECode532755
CP1DesignationMD & CEO
CP1NameMr. CP Gurnani
CP2DesignationCFO
CP2NameMr. Manoj Bhat
CP3DesignationNA
CP3NameNA
CallDate05 Nov 2019
DescriptionRecord TCV wins: The company had its highest TCV wins during the quarter.TCV worth of USD1.49billion was won during the quarter. Both Enterprise and communication vertical contributed to wins with USD 1billion coming from telecom and rest USD 490 million from enterprise segment. Continued growth in digital: It is now contributes 39% to revenues and grew QoQ. Digital remains the major foundation of growth. Pipeline for digital transformation is strong. Born acquisition The company acquired Born group which is largest independent , integrated agency for strategy , creative, content and commerce offering with strong technology capabilities .The acquisition was worth of USD95 million and it will enhance TECHM transformation consulting capabilitiesthrough addition of creative and design skills, technology and analytics platforms and commerce expertise. Telecom Large deal won will drive in next two quarter. Enterprise: Strong revival seen in enterprise business due to broad based growth across verticals like BFSI, Retail and healthcare .While Manufacturing remained soft due to sluggishness in Auto segment. Manufacturing which was sluggish in 2Q but hopefully expected to start to grow from 3Q.BFS, Retail, HLS which has shown solid growth in 2Q will even out in coming quarters as they increased due to fast ramp of deal won .Overall the pipeline remain good and management expects to grow from the current level (digital transformation will continue to drive growth). HCI has now shown steady stream, the management expects in 3QFY20 seasonality impact to be much lower than last year. Retail will remain strong in 3QFY20. Management expect to growth to moderate a bit but will have steady growth in enterprise segment in FY20 Margins Margin expanded 130 bps sequentially during the quarter.Margin (break-up):1) operational efficiency including certain benefits in SG&A(100bps);2)portfolio companies, 3) lack of visa cost benefited the margins, while partial salary hike impacted by margins by 20 to 30bps . On SG&A the company believes normalize SG&A will be 13.5%to 13.8% for FY20. Margin in next few quarters will under pressure due to transition cost .Thus management believe margin decline of 150 to 250 bps in FY20. For FY21 management expects margins to be at 15%. DSO days: DSO for the quarter increased by 4 days .Most of the increase came due to unbilled DSO. Hopefully to get DSO number down in next two quarters. TAX: The company got a tax refund which resulted in tax rate for this quarter at 16.9%.However management feels it should be considered as one off and expects normalize rate to be range in25% to 26% for FY20. Cash flow: Free cash flow during the quarter is USD 73 million. Cash paid on acquisition and dividend impacted the cash balance during the quarter. Growth outlook: The Company remains consistent with last outlook. Telecom is expected to grow industry level in cc terms .Enterprise will lag but it is picking
SubjectQ2FY20 EARNING CONFERENCE CALL

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