Tech Mahindra share price was trading as the top gainer on BSE and NSE today after the company reported healthy set of earnings for the quarter ended June, 2020. The company reported a 20% growth in its net profit at Rs 972.3 crore in Q1FY21 from Rs 803.9 crore in the previous quarter. Profit rose 1.35% YoY. Company's revenue came 5.23% higher YoY at Rs 9,106.3 crore, although down 4% QoQ.
Following the result update, Tech Mahindra shares gained 5.78% to the intraday high of Rs 702.4 on BSE against the earlier close of Rs 664.05. The stock also hit an intraday low of Rs 668 during today's session, after opening at Rs 672. Stock price of the IT major has risen 9.52% in the last 4 days of gains.
Shares of country's fifth-largest IT services company by market capitalisation have risen 20% in one month and 5.26% in one year. Tech Mahindra stock is trading higher than its 5, 20, 50, 100 and 200-day moving averages.
On Tech Mahindra's Q1 results, management said the impact of Covid-led disruptions was quite visible on its quarterly numbers, especially in manufacturing and communications verticals. The performance in June quarter was better than the IT major budgeted for at the beginning of the quarter.
Market capitalisation of the firm stood at Rs 65,489.50 crore as of today's session.
CITI kept the target price at Rs 800 for the stock with 'Buy' rating and said company's supply-side issues improved that also contributed to one-fourth of decline QoQ. The brokerage has raised FY21/22 estimates by 3 to 4% and multiples to 15.5 times as compared to 14 times earlier.
Goldman Sachs in its report said it has raised EPS estimates by up to 8% on improving gerowth trajectory of the IT major. It said that its margin may improve on lower travel, facility expenses, higher offshoring and automation. The brokerage maintained a 'buy' call on the stock with a target price of Rs 763 per share.
CLSA said it has maintained a 'buy' call on the stock with a target at Rs 700 per share. It said Q1 earnings were good but not great, although there was strong margin management by the IT major in Q1. It added low revenue growth visibility could constrain stock's incremental moves and adjusted FY21/22 EPS estimates by 12/4%
ICICI Securities in its note said," We believe its leadership in the communication vertical will make it a key beneficiary of vendor consolidation in the segment. It would also benefit from 5G opportunities. Enterprise segment will also benefit from improved digital traction and success in large deals. Hence, we remain positive on the stock".
Commenting on Q1 FY21 results of Tech Mahindra, Jyoti Roy, DVP- Equity Strategist, Angel Broking said,"Net profit for the quarter was up by 21% QoQ to Rs 972 crore which was ahead of street estimate largely on account of higher other income for the quarter along with few one-off expenses last quarter which had led to a lower base. While the Q1FY21 results were largely ahead of street estimates concerns remain over the company's over-dependence on the communications vertical which accounts for 40% of the company's revenues and degrew by 8.6% QoQ in USD terms."
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