Shares in Tech Mahindra surged as much as 6 per cent on Friday after the IT major posted a 4.7 per cent rise in US dollar sales, beating Street estimates. A string of brokerages upped their target price on Tech Mahindra post earnings announcement on Thursday, leading to strong buying interest in the counter today.
As of 09.35 a.m., Tech Mahindra shares traded 5.1 per cent higher at Rs. 1,661, outperforming the broader BSE IT benchmark, which was up 0.9 per cent. The stock also saw strong volumes in early trade. This was the highest the stock has touched since May 2007.
Bank of America Merrill Lynch raised its FY15-16 earnings per share estimate by 7 per cent and target price on the stock to Rs. 1,750. Domestic brokerage Kotak raised its target price on the stock to Rs. 1,850.
\"Tech Mahindra is getting growth at inexpensive valuations,\" the brokerage added.
Credit Suisse said valuations remain attractive despite stock run-up. The investment bank raised its target price on Tech Mahindra to Rs. 1,925.
Tech Mahindra\'s Q2 sales rose to Rs. 4,771.49 crore as against Rs. 4,103.23 crore in the previous quarter, while adjusted profits were slightly lower at Rs. 680 crore against Rs. 686.31 crore in the June quarter. High taxation and lower other income due to forex loss hit profitability.
Tech Mahindra\'s management, however, clarified that the tax increase was a one-off event.
Revenues in US dollars rose to $758 million, while ebitda margin jumped 220 basis points sequentially to 23.3 per cent.
Tech Mahindra won 13 new deals wins (4-5 large opportunities) in the quarter. It added a net of 2171 employees, which is the highest in last 8-quarters.
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