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ICICI Securities Report
We believe that Mohit Joshi, Managing Director and Chief Executive Officer designate of Tech Mahindra Ltd. is making strides in the right direction:
Reshuffling internal leaders and hiring new leaders – Chief Operating Officer, banking financial services and insurance America and Europe heads, Chief Human Resources Officer, Chief Marketing Officer (yet to be hired).
Organisation restructuring to make it more client centric, drive client mining and large deals.
Rationalisation of non-core businesses.
Improving operating parameters.
We expect these changes to fructify in the form of increased large total contract value H2 FY25 onwards, which is likely to translate into steady sustainable revenue growth performance FY26 onwards.
We also expect margins to revive from Q1 FY25 given several low hanging fruits – elaborated below.
We continue to value Tech Mahindra on 20 times Q5-Q8 earnings per share of Rs 69 for an unchanged target price of Rs 1,372. And, we reiterate ‘Buy'.
Key downside risks:
Weak execution,
delay in revival of telecom,
high attrition at senior management level because of organisational changes,
Tech Mahindra is not able to build capabilities organically and therefore may have to pay higher for acquisitions.
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