Tech Mahindra is an Indian multinational information technology services and consulting company. The company belongs to the Mahindra Group with their headquarters in Pune and has its registered office in Mumbai. Tech Mahindra is a US$6.0 billion company with over 158,000 employees across 90 countries. The company was ranked 5th in India’s IT firms and 47th on Fortune India 500 list for 2019. On 25 June 2013, Tech Mahindra announced the completion of a merger with Mahindra Satyam. Tech Mahindra has 1262 active clients as of June 2022.
Tech Mahindra Limited has entered into share subscription agreement to acquire 26% equity shares in Upendra Singh Multi Transmission Private Limited. The acquisition would enable the Company to procure 1.5 MW of Solar Energy for its captive consumption at its facilities located in Noida, UP.
Tech Mahindra Ltd provides comprehensive range of IT services, including IT enabled service, application development and maintenance, consulting and enterprise business solutions, etc. to a diversified base of corporate customers in a wide range of industries.
Quarterly Growth Walkthrough
Tech Mahindra reported a 3% year-on-year slip in consolidated net profit at Rs 1,299 crore for the quarter ended September 30, 2022. However, the revenue from sales has increased by 20.6% year-on-year to Rs 13,130 crore.
Comparing to the first quarter of the current fiscal year, the revenue from sales is up by 3.3% and net profit is up by 14%. The dollar revenue has grown by 3% sequentially.
The company has brought in new deals worth $716 million which is lower as compared to $802 million in the same quarter of the previous fiscal year. The company has secured 20% of its total revenue from their major 5 clients.
Tech Mahindra has seen their attrition rate falling in the last quarter similar to its peers. The 12-month trailing attrition rate has dropped from 22% to 20%. The total headcount of the company is at 163,912. The employee cost has spiked by 27% YoY and 5.3% QoQ at Rs 6,895 crore.
Tech Mahindra EPS has decreased to Rs 13.21 in September 2022 from Rs 13.81 in September 2021.
Sale of subsidiary
Tech Mahindra has approved the sale of its 100 percent stake wholly owned subsidiary Dynacommerce Holdings BV to Comviva Netherlands BV, its step-down subsidiary, at a valuation of €6.6 million. The company has mentioned that it is expected to complete the sale in the first week of January 2023 and the agreement is expected to be signed during the same time.
The company said Dynacommerce’s turnover in CY2021 was euro 5.1 million, which is less than 1 percent of its total revenue. The proposed transaction would not have any impact on the consolidated turnover of Tech Mahindra.
Partnership with Airtel
Bharti Airtel and Tech Mahindra have signed a strategic partnership under which the two companies have deployed ‘5G for Enterprise’ solution at Mahindra’s Chakan manufacturing facility, which converts the facility into India’s first 5G-enabled auto manufacturing unit. The ‘5G for Business’ solution has enhanced Chakan’s network connectivity resulting in improved speeds for software flashing, a critical operation for all vehicular dispatches. The company claims that hi-speeds and ultra-low latency enables managers to undertake multiple software flashing sessions in parallel, which has resulted in reduced turn-around time for an operation.
Technical Analysis
Tech Mahindra stock price has corrected down to Rs 1009 from its lifetime high of Rs 1838. The stock price has been taking heavy support at the 61.8% retracement level since the month of June 2022. Accumulation of the stock is a great idea as it has been stagnating at this level and the price has been unable to break below it. The price is hovering around the 200-day exponential moving average which gives it an attractive buy signal and the MFI is at 34 points which is very close to being oversold. Hence the company can be a safe large-cap stock for the portfolio at very cheap valuation.