26 February 2015
Update | Sector: Technology
Tech Mahindra
BSE Sensex
29,005
S&P CNX
8,762
CMP: INR2,765
TP: INR3,200 (+16%)
Buy
Revenue growth traction intact…
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val. INRm/Vol‘000
Free float (%)
…but sustaining profitability is the key challenge
TECHM IN
240.0
2998/1678
0/10/11
670.1
10.8
1634/757
63.3
Financial Snapshot (INR b)
2015E 2016E 2017E
Y/E Mar
Sales
EBITDA
Adj. PAT
Adj. EPS (INR)
EPS Gr. (%)
RoE (%)
RoCE (%)
Payout (%)
P/E (x)
EV/EBITDA (x)
225.7 287.8 335.0
43.1
28.9
4.4
27.0
28.7
17.0
21.2
13.1
53.2
35.6
23.0
26.2
29.2
18.7
17.2
10.5
63.9
43.9
23.2
26.4
30.0
17.7
14.0
8.3
130.4 160.4 197.7
Shareholding pattern (%)
As on
Dec-14 Sep-14 Dec-13
Promoter
36.0
36.2
36.5
DII
10.6
10.8
15.1
FII
39.6
39.1
32.6
Others
13.7
14.0
15.8
FII Includes depository receipts
Stock Performance (1-year)
Tech Mahindra
Sensex - Rebased
Organic revenue growth in Telecom is driven by three trends for TECHM: [1]
Digitization programs of Telecom service providers, [2] Continued share
gains in the Renewal market and [3] Addition of Network services to its
portfolio.
However, despite multiple revenue drivers, organic CC growth in FY16 for
Telecom vertical should lag the high base of ~25% YoY CC organic growth in
9MFY15.
Deal wins in Enterprise segment have progressively improved, with TECHM
winning sizeable deals in verticals other than Manufacturing too, in last
couple of quarters. That will help propel organic growth in Enterprise
segment to industry average in FY16, compared to high single digits in FY15.
Headwinds to margins in 4Q will come from: [1] Wage hikes effective in
January, [2] Partial impact from LCC integration. However, impact to
margins would be cushioned by seasonality in Comviva. Key pressure to
margins will come in 1QFY16 from [1] Full quarter impact of LCC and Sofgen
integrations,[2] Visa expenses and [3] Base effect of Comviva in 4Q.
TECHM’s aim will be to maintain organic revenue margins at levels similar
to FY15 (~19%), while acquisitions will be a 100bp headwind on top of the
same.
Our EBITDA margin for FY16 is lower by 70bp to 18.5% given the pressures
in 1QFY16 that should suppress the profitability, which we expect to pick up
during the course of the year. This also feeds into 4.6% cut in EPS estimate
for FY16.
Telecom growth pockets expand beyond market-share gains
3,100
2,700
2,300
1,900
1,500
TECHM has grown over the years in Telecom vertical by gaining market
share, increasing presence in multiple
areas of the Telecom vertical like
Managed Services. Recent foray in the Network services has been yet
another step in this direction to increase its addressable market opportunity.
In addition to that, growth in Telecom in FY15 has been supported by
digitization programs picking up across various Telecom companies.
For FY16 LCC will be an inorganic growth driver for the Telecom vertical,
organically too, while the growth will continue to be sanguine too. However,
the base growth in FY15 is significantly high -
25% YoY constant currency
growth in the 9MFY15, all of which is organic. Organic growth in FY16 is
expected to be relative lower due to the base effect.
Integration of LCC acquisition is expected to contribute USD430m+ of
revenues to the Telecom vertical in FY16.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424
Siddharth Vora
(Siddharth.Vora@MotilalOswal.com); +91 22 3982 5585
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Tech Mahindra
Exhibit 1: Expect organic growth deceleration in Telecom vertical
Telecom Growth (% YoY)
26.6
23.8
8.9
5.4
-0.9
FY09
FY10
FY11
8.8
9.2
FY12
FY13
FY14
9MFY15
Source: Company, MOSL
Expect growth in the Enterprise segment to accelerate in FY16
TECHM’s deal win performance in the Enterprise segment has progressively
improved in the last few quarters – and now spans verticals other than
Manufacturing as well. This is expected to accelerate its organic growth in the
verticals outside Telecom from high single digits to in line with the industry
average in FY16.
Exhibit 2: Expect Enterprise Segment growth to accelerate further as multiple deal wins are being seen in the segment
500
Deal TCV (USD m)
Enterprise Segment Revenues (USD m)
1,571
270
270
1,426
220
10.1
1,307
Growth (YoY %)
12.2
190
220
250
1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15
FY13
FY14
9MFY15
Source: Company, MOSL
Margins face headwinds from acquisitions
4Q will witness 170-180bp headwind from wage hikes, and ~50-60bp
considering 45 days post integration with LCC. There are multiple levers
Utilization, employee pyramid and offshore revenue mix. 4Q is seasonally a
strong quarter for Comviva which is also expected to aid margins. We expect
margins to fall 140bps to 18.8% in 4QFY15 and FY15 margins are expected to be
19.3%.
1QFY16 will be the quarter with further pressure to margins in the form of visa
costs, expected lower revenues from Comviva and full quarter impact of LCC
integration. TECHM’s acquisitions LCC and Sofgen have high single digit margins
and improvement in same would be gradual.
TECHM’s aim will be to maintain organic revenue margins at levels similar to
FY15 (~19%), while acquisitions will be a 100bp headwind on top of the same.
26 February 2015
2

Tech Mahindra
Exhibit 3: FY16 margins face 100bp headwind from merger of acquisitions
EBITDA Margins
22.2
21.0
18.6
21.4
19.3
19.2
FY11
FY12
FY13
FY14
FY15E
FY16E
Source: Company, MOSL
Marginal moderation to FY16E EBITDA
Our estimates for top line remain largely unchanged post the discussion. We
expect growth at TECHM to continue to stay ahead of the industry. 1% change in
FY16 revenue growth is on the back of cross currency MTM.
Our EBITDA margin for FY16 is lower by 70bp to 18.5% given the pressures in
1QFY16 that should suppress the profitability, which we expect to pick up during
the course of the year.
Exhibit 4: Change in estimates
Revised
FY15E FY16E
61.3
62.0
3,682
4,643
18.8
26.1
19.1
18.5
16.4
16.1
130.4
160.4
FY17E
62.0
5,403
16.4
19.1
16.9
197.7
FY15E
61.2
3,692
19.2
19.3
16.6
132.3
Earlier
FY16E
62.0
4,692
27.1
19.2
16.8
168.2
FY17E
62.0
5,426
15.6
19.2
17.0
199.9
Change
FY15E FY16E FY17E
0.2%
0.0%
0.0%
-0.3%
-1.1%
-0.4%
-37bp -99bp
78bp
-21bp -73bp -12bp
-17bp -72bp -12bp
-1.4%
-4.6%
-1.1%
Source: Company, MOSL
INR/USD
USD Revenue-m
USD rev Gr (%)
EBIDTA Margin (%)
EBIT Margin (%)
EPS - INR
26 February 2015
3

Tech Mahindra
Valuation view: Expect continued growth leadership with stable margins
Prospects of revenue growth at the top-end of the industry band remain
sanguine at TECHM due to multiple reasons:
1. Success in large deal wins is an encouraging indicator of TECHM’s improving
competitive prowess, even in the Enterprise segment. With three large deal
wins in Manufacturing beginning to come through, prowess in Telecom will
likely be compounded with Enterprise too, keeping growth outlook sanguine.
2. Also, its expertise in the Telecom vertical has thus far overshadowed the
structural concerns in the client industry, as it continues to increase its share
within its top accounts.
3. Network management services have potentially expanded the addressable
market for TECHM, with directly addressable spend standing at ~USD40b.
Additionally, opportunity going forward comes from increased adoption of
offshore services by Continental Europe.
4. TECHM also has a sizeable scale in Engineering services, and the opportunity
in the same can be leveraged, especially after the acquisition of Mahindra
Engineering Services (MES)
While the integration of LCC to TECHM’s numbers will dent the margins in the
near term (~100bp impact on current base of 19%) along with wage hikes
(~200bp impact), we expect the company to operate its margins in a band of 18-
19%, especially as the cost efficiencies at LCC help improve the margins in the
acquired entity from 8% currently to 12%. The acquisition of Sofgen is only a
small step towards the company’s much coveted scale in BFSI, but access to tier-
I accounts in emerging economies can help drive some large deal wins.
While cash flows generation has been a potential concern, TECHM’s
OCF/EBITDA should average ~55%, close to TCS’ 60%. Also, TECHM’s active
inorganic foray has ensured relatively better capital allocation v/s peers, and its
track record of successfully integrating companies keeps prospects of profitably
scaling into the big league sanguine.
We expect TECHM to grow its USD revenue at a CAGR of 21% over FY15-17 and
EPS at a CAGR of 23% during this period. At 17x FY16E and 14x FY17E EPS, the
stock is above its 5-year average, justifiably given the improvement in revenue
growth and margins following merger with Satyam; and increasing irrelevance of
the pressures in BT. Our Target Price of INR3,200 discounts FY17E EPS by 16x,
following expectation of sustained above-industry growth over the medium
term. Maintain
Buy.
Key Triggers
Large deal announcements in enterprise segment.
Efficiency led offset to near term margin headwinds.
Recovery in enterprise revenue growth.
Key Risks
Deterioration in cash conversion.
INR appreciation given higher sensitivity to earnings v/s peers.
Greater than anticipated margin decline.
26 February 2015
4

Tech Mahindra
Exhibit 5: TECHM 1-year forward PE chart
88
66
44
22
0
10.9
16.9
P/E (x)
5 Yrs Avg(x)
8 Yrs Avg(x)
Exhibit 6: TECHM 1-year forward PB chart
20.0
15.0
10.0
5.0
0.0
2.6
4.0
P/B (x)
5 Yrs Avg(x)
8 Yrs Avg(x)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 7: Comparative valuation
Company
TCS
Infosys
Wipro
HCL Tech
TechM
Cognizant
Tier-I Agg
Mcap
USDb
84.4
42.8
26.4
22.6
10.5
38.1
224.8
TP
Upside
EPS (INR)
P/E (x)
RoE (%)
(INR)
(%)
FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E
Neutral
2650
-0.8 108.4 125.8 147.2 24.6
21.2
18.2
35.2
34.0
Buy
2500
7.8
108.7 120.0 137.7 21.3
19.3
16.8
26.2
24.8
Neutral
640
-3.6
35.0
37.8
42.6
19.0
17.6
15.6
24.8
24.3
Buy
2150
8.4
105.5 117.0 132.5 18.8
17.0
15.0
33.3
30.7
Buy
3200
15.7 130.4 160.4 197.7 21.2
17.2
14.0
27.4
26.2
Not Rated
2.3
2.7
3.2
26.6
23.2
19.4
20.7
19.3
21.9
19.1
16.5
27.9
26.7
Rating
FY17E
32.7
24.6
23.1
29.2
26.4
19.0
25.8
Source: Company, MOSL
FY15-17E CAGR (%)
USD rev. EPS
13.7
16.5
12.5
12.6
11.4
10.3
14.4
12.0
21.1
23.1
17.7
17.0
26 February 2015
5

Tech Mahindra
Story in charts
Exhibit 1: Telecom prowess reflected in vertical mix
Retail,
Travel,
Logistics,
6.4
BFSI, 9.8
Tech,
Media, Ent,
7.3
Manufactur
ing, 19.7
Source: Company, MOSL
Telecom,
50.9
5.4
985
FY09
-0.9
977
FY10
8.9
1063
FY11
8.8
1156
FY12
2633
FY13
17.7
18.8
Vertical mix (%)
Others, 5.9
Exhibit 2: Scale and diversity lent by Satyam acquisition
Revenue (USD m)
YoY Growth (%)
127.7
3098
FY14
3682
FY15E
Source: Company, MOSL
Exhibit 3: Active on the acquisition front – building scale and competencies
STANDALONE TECHM
Mahndra Satyam
Hutchison Global Services
Comviva
MAHINDRA SATYAM
Complex IT (Brazil)
COMBINED ENTITY
Mahindra Engineering Services
BASF Business Service Consult
Fix Stream
Lightbridge Communication Corp.
Sofgen holdings Ltd
Time
Apr-09
Sep-12
Sep-12
Feb-13
Nov-13
Feb-14
Apr-14
Nov-14
Jan-15
Valuation (USD m)
1,133
67
95
45
121
NA
10
240
~30
Revenue (USD m)
481 (FY11)
170
70
45
42
NA
NA
430
45
Employees
48,000
11,500
1,500
500
1,300
60
NA
5,700
450
Source: Company, MOSL
Exhibit 4: Strong execution reflected in much
improved efficiency
EBITDA margin (%)
24.5
20.4
16.7
21.4
22.2
19.1
Exhibit 5: Incremental Deal TCV keep growth
outlook sanguine
500
Deal TCV (USD m)
190
220
270
250
270
220
FY10
FY11
FY12
FY13
FY14
FY15E
1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15
Source: Company, MOSL
Source: Company, MOSL
26 February 2015
6

Tech Mahindra
Exhibit 6: Operating Metrics
Operating Metrics
Revenue by geography (%)
Americas
Europe
Rest of World
Vertical Split (%)
Telecom
Manufacturing
Tech | Media | Entertainment
BFSI
Retail | Transport | Logistics
Others
Onsite-offshore mix (%)
Onsite
Offshore
Client Metrics
No. of active clients
% of repeat business
No. of Million $ clients
USD1m+
USD5m+
USD10m+
USD20m+
USD50m+
Client concentration (%)
Top client
Top 5 Clients
Top 6-10
Top 11-20
Headcount (end of period)
Software professionals
BPO
Sales and Support
Total
IT Attrition (LTM) (%)
IT Utilization (%)
IT Utilziation (excluding trainees) (%)
Receivable Days (DSO)-Including Unbilled
Borrowings (USD m)
Cash and Cash Equivalent (USD m)
Capital Expenditure (USD m)
3QFY13
43
35
22
4QFY13
42
33
25
1QFY14
45.1
32.4
22.5
2QFY14
44.2
33
22.8
3QFY14
47.1
30.9
22
4QFY14
44.9
30.6
24.4
1QFY15
46.8
31.1
22.1
2QFY15
49.1
31.2
19.8
3QFY15
48.8
31.4
19.8
46
18
12
11
7
6
48
19
12
10
6
5
49.2
19.2
10.5
9.3
6
5.8
48.3
18.6
10.5
9.4
7.1
6.1
48.8
19
9.1
9.9
6.9
6.3
50.8
18.5
8.6
10.1
6.4
5.6
50.7
17.8
8.9
10.3
6.3
6
52
17.7
8.3
9.7
6.2
6.1
50.9
19.7
7.3
9.8
6.4
5.9
48.3
51.7
48.4
51.6
50.9
49.1
51.0
49.0
52.3
47.7
52.7
47.3
53.7
46.3
55.2
44.8
55.3
44.7
475
92
516
94
567
97
576
95
605
92
629
88
632
99
649
97
674
95
206
77
48
22
9
205
70
42
24
9
215
74
46
25
10
223
77
48
26
10
239
75
47
25
11
239
75
52
27
11
242
80
51
29
11
245
86
50
30
12
254
88
51
32
13
14
39
11
12
13
37
13
11
12
37
12
11
36
12
13
37
12
12
38
13
12
37
13
12
40
11
12
37
12
12
53,072
26,379
6,195
85,646
16
76
78
98
199.2
676
15.5
52,126
24,699
6,284
83,109
16
77
79
96
213.6
673.9
41.9
53,337
23,269
6,457
83,063
14
76
78
97
125.7
615.4
41.2
55,432
23,225
6,577
85,234
14
75
77
102
53.5
522.7
23.8
57,601
23,213
6,585
87,399
15
75
77
100
55.3
559.7
21.2
60,997
21,830
6,614
89,441
15
74
78
96
60.6
600.6
44.6
64,095
21,936
6,698
92,729
16
72
75
66,175
22,433
6,701
95,309
18
73
76
67,592
23,566
6,851
98,009
19
74
78
102
102
100
14.3
10.2
10.2
609.7
556
668.4
43.6
38.5
53.5
Source: Company, MOSL
26 February 2015
7

Tech Mahindra
Exhibit 7: Operating Metrics
Operating Metrics
Rupee USD Rate
Period closing rate
Period average Rate
Proportion of Revenues From Major Currencies
USD
GBP
EURO
AUD
Others
Consolidated Hedge Position
GBP In Mn
Strike rate (INR)
USD In Mn
Strike rate (INR)
Verticals (QoQ)
Telecom
Manufacturing
Tech | Media | Entertainment
BFSI
Retail | Transport | Logistics
Others
Total
Revenue by geography (QoQ)
Americas
Europe
Rest of World
Total
Client concentration (QoQ)
Top 5
Top 6-10
Top 11-20
Net additions
Software professionals
BPO
Sales and Support
Total
3QFY13
55
54.36
4QFY13
54.29
53.96
1QFY14 2QFY14
59.39
56.57
62.61
62.91
3QFY14
61.81
61.92
4QFY14
59.92
61.46
1QFY15
60.18
59.87
2QFY15
61.5
60.94
3QFY15
63.04
62.15
47
24
7
9
14
47
23
7
8
14
50.1
19.2
8.5
7.4
14.8
48.1
19.7
8.7
6.8
16.5
48.8
17.5
9.2
7.1
17.4
48.6
16.4
9.9
7.7
17.4
49.8
16.2
10.2
6.7
17.1
51.5
16.1
10.3
6.4
15.6
51.1
14.9
11.9
5.8
16.4
276.6
88.04
910.3
55.64
262.8
89.89
911
56.93
267.9
91.58
1081.6
58.22
244.2
92.4
899.3
58.9
211
94.2
771
59.5
170.5
95.3
783.9
60.6
144.3
97.1
1046.8
61.6
123.3
99.9
1224.2
63
108
103.7
1582.5
65.2
7.1
-0.8
-3.3
4.7
4.7
25.7
4.7
8.0
9.2
3.5
-6.0
-11.3
-13.8
3.5
6.3
4.8
-9.3
-3.6
3.7
20.3
3.7
2.8
1.4
4.7
5.8
23.9
10.1
4.7
5.4
6.6
-9.6
9.9
1.4
7.8
4.4
8.6
1.6
-1.4
6.4
-3.3
-7.3
4.3
3.5
-0.3
7.3
5.7
2.0
11.1
3.7
7.9
4.6
-1.9
-0.9
3.6
7.0
5.2
0.5
14.3
-9.7
3.8
6.0
-0.7
2.7
0.1
7.8
9.7
4.7
1.0
-2.5
17.6
3.5
11.4
1.8
-6.7
3.7
2.6
6.6
6.1
4.7
11.2
-2.3
0.7
4.4
-0.6
3.3
15.7
4.2
8.0
5.4
-6.1
3.8
10.4
5.6
-5.7
5.3
2.1
3.4
2.7
2.6
-2.2
-0.4
15.2
-3.9
-1.9
22.3
-4.3
3.7
-4.3
1.9
4.7
23.7
7.3
4.4
-3.7
7.1
13.0
4.3
0.9
3.7
3.7
13.8
-11.0
5.2
-5.0
12.0
2.7
697
-2,232
275
-1,260
-946
-1,680
89
-2,537
1,211
-1,430
173
-46
2,095
-44
120
2,171
2,169
-12
8
2,165
3,396
-1,383
29
2,042
3,098
106
84
3,288
2,080
497
3
2,580
1,417
1,133
150
2,700
Source: Company, MOSL
26 February 2015
8

Tech Mahindra
Financials and valuations
Key Assumptions
Y/E March
INR/USD Rate
Revenues (USD m)
Total Headcount
Net Addition
Per Capita Productivity (USD)
Utilization uncl. Trainees (%)
IT Services (%)
2010
905
2011
45.5
2,194
2012
47.5
2,463
74,116
2013
54.4
2,633
83,109
8,993
31,678
75.5
90.5
2014
60.8
3,098
89,441
6,332
34,638
75.0
90.3
2015E
61.3
3,682
105,051
15,610
35,046
74.3
91.5
2016E
62.0
4,643
124,669
19,618
37,240
78.1
92.2
2017E
62.0
5,403
143,393
18,724
37,682
79.6
91.9
Income Statement
Y/E March
Sales
Change (%)
Total Expenses
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
PAT
Minority Interest & EO items
PAT before EO
Change (%)
Effect of restructuring fees
PAT after RF before EO
2010
46,254
3.6
34,929
11,325
24.5
1,338
2,184
754
8,557
1,440
16.8
7,118
113
8,265
-18.5
-1,663
6,601
2011
48,413
4.7
38,518
9,895
20.4
1,435
999
1,174
8,635
1,315
15.2
7,320
653
8,787
6.3
-1,695
7,092
2012
54,897
13.4
45,703
9,194
16.7
1,614
1,413
1,368
7,535
1,438
19.1
6,097
714
10,918
24.2
-1,618
9,299
2013
143,320
161.1
112,689
30,631
21.4
3,896
922
2,121
26,334
6,479
24.6
19,855
301
19,554
79.1
-1,340
18,214
2014
188,313
31.4
146,477
41,836
22.2
5,221
673
1,129
37,071
9,790
26.4
27,281
336
26,945
37.8
-1,117
25,828
2015E
225,746
19.9
182,653
43,093
19.1
6,002
229
2,184
39,047
10,229
26.2
28,818
171
28,647
6.3
0
28,647
(INR Million)
2016E
287,845
27.5
234,682
53,163
18.5
6,886
418
2,190
48,049
12,252
25.5
35,796
200
35,596
24.3
0
35,596
2017E
335,003
16.4
271,069
63,934
19.1
7,388
287
3,295
59,554
15,484
26.0
44,070
200
43,870
23.2
0
43,870
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Loans
Amount pending invest.
Capital Employed
Assets
Investments
Long term loans and adv
Deferred Tax Assets
Other non-current assets
Curr. Assets
Debtors
Cash & Bank Balance
Loans & Advances
Current Investments
Other Current Assets
Current Liab. & Prov
Net Current Assets
Application of Funds
E: MOSL Estimates
26 February 2015
2010
1,223
25,268
26,491
139
13,672
40,302
6,043
30,145
276
19,346
10,420
2,187
6,725
14
16,342
3,004
42,676
2011
1,260
32,254
33,514
159
12,227
51,737
6,170
29,080
638
23,455
12,468
2,666
8,315
6
8,711
14,744
51,737
2012
1,275
42,032
43,307
0
11,266
54,573
6,868
35,876
998
20,437
13,172
2,418
4,845
2
11,235
9,202
54,573
2013
2,316
66,214
68,530
1,349
14,702
12,304
96,885
22,318
12,429
7,433
3,477
219
89,634
33,688
34,629
12,925
1,745
6,647
41,220
48,414
96,885
2014
2,335
89,469
91,804
1,453
8,420
12,304
113,981
28,606
12,194
9,137
3,830
157
105,472
43,486
33,202
14,544
2,525
11,715
45,415
60,057
113,981
2015E
2,400
119,866
122,266
1,578
8,687
12,304
144,835
41,115
12,194
11,376
4,109
13
115,509
54,475
25,026
16,482
5,841
13,686
44,175
71,334
144,835
(INR Million)
2016E
2,400
147,011
149,411
1,578
8,477
12,304
171,769
45,160
12,194
11,376
4,109
13
143,598
70,149
34,554
16,482
5,841
16,573
49,375
94,223
171,769
2017E
2,400
181,021
183,421
1,578
7,956
12,304
205,259
47,772
12,194
11,376
4,109
13
180,475
81,566
57,327
16,482
5,841
19,259
55,374
125,101
205,259
9

Tech Mahindra
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Diluted EPS
Cash EPS
Book Value
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Fixed Asset Turnover (x)
Leverage Ratio
Debt/Equity Ratio(x)
2010
54.0
50.5
60.7
216.6
3.5
6.9
2011
56.3
54.3
65.2
266.0
4.0
7.4
2012
72.9
70.4
82.6
339.7
4.0
5.7
39.3
33.5
38.6
6.5
8.1
0.1
30.7
30.8
77
4.5
0.5
25.7
18.4
86
4.0
0.4
26.0
14.3
85
3.9
0.3
2013
98.2
95.6
112.6
325.5
5.0
5.8
32.0
24.6
17.4
3.7
8.2
0.2
32.6
35.3
60
5.8
0.2
2014
126.4
122.7
147.5
449.3
20.0
16.3
22.5
18.8
12.6
2.8
6.2
0.7
36.4
34.7
75
7.0
0.1
2015E
133.2
129.1
156.2
568.5
22.0
17.0
21.4
17.7
13.1
2.5
4.9
0.8
27.0
28.7
79
6.1
0.1
2016E
165.5
160.4
191.5
694.7
30.0
18.7
17.2
14.4
10.5
1.9
4.0
1.1
26.2
29.2
79
6.0
0.1
2017E
204.0
197.7
231.0
852.8
35.0
17.7
14.0
12.0
8.3
1.6
3.2
1.3
26.4
30.0
83
6.5
0.0
Cash Flow Statement
Y/E March
CF from Operations
Change in Working Capital
Other adjustments
Net Operating CF
Net Purchase of FA
Net Purchase of Invest.
Net Cash from Invest.
Inc./(Dec) in Equity
Proceeds from LTB/STB
Dividend Payments
Cash Flow from Fin.
Net Cash Flow
Opening Cash Balance
Add: Net Cash
Closing Cash Balance
E: MOSL Estimates
11,832
-4,069
-25,799
-29,868
1,670
13,672
-501
14,841
-3,195
5,382
-3,195
2,187
4,455
541
1,065
1,606
-3,548
-1,445
-590
-5,582
479
2,187
479
2,666
11,470
-2,836
-6,796
-9,632
-528
-961
-597
-2,086
-248
2,666
-248
2,418
2010
9,549
2,283
2011
15,717
-11,261
2012
3,692
7,778
2013
14,259
-7,608
37,353
6,651
-3,099
-1,940
-5,039
1,032
-7,036
-750
-6,754
32,211
2,418
32,211
34,629
21,634
-7,854
-8,539
-16,393
19
-1,305
-5,381
-6,668
-1,427
34,629
-1,427
33,202
17,225
-19,525
671
-18,854
65
-415
-6,198
-6,547
-8,176
33,202
-8,176
25,026
2014
33,935
-12,302
2015E
32,979
-15,753
(INR Million)
2016E
40,711
-13,362
27,349
-11,351
2,190
-9,161
0
-208
-8,452
-8,660
9,528
25,026
9,528
34,553
2017E
48,250
-8,104
40,146
-11,041
3,295
-7,746
0
233
-9,860
-9,627
22,773
34,553
22,773
57,326
26 February 2015
10

Tech Mahindra
Corporate profile: Tech Mahindra
Company description
Tech Mahindra represents the connected world,
offering
innovative
and
customer-centric
information technology services and solutions,
enabling Enterprises, Associates and the Society to
Rise™. It is a USD3.5b company with ~98,000+
professionals across 51 countries, helping over 674
global customers including Fortune 500 companies.
It is a part of the USD 16.7 billion Mahindra Group
that employs more than 180,000 people in over
100 countries.
Exhibit 17: Sensex rebased
Tech Mahindra
3,100
2,700
2,300
1,900
1,500
Sensex - Rebased
Exhibit 9: Shareholding pattern (%)
Dec-14
Promoter
DII
FII
Others
36.8
11.4
38.1
13.7
Sep-14
36.0
10.6
39.6
13.7
Dec-13
36.4
9.1
40.4
14.2
Exhibit 10: Top holders
Holder Name
Europacific Growth Fund
ICICI Prodental Focused Bluechip Equity Fund
National Westminster Bank PLC as Depository of First
Government Pention Fund Global
National Westminster Bank Plc as Depository of First
% Holding
2.1
1.4
1.4
1.3
1.2
Note: FII Includes depository receipts
Exhibit 11: Top management
Name
C P Gurnani
Manoj Chugh
Manish Vyas
Milind Kulkarni
RAkesh Soni
Designation
MD & CEO
Global Head, Business Developt.
Global Head, Communications
CFO
COO
Exhibit 12: Directors
Name
Anand G Mahindra
C P Gurnani
M Damodaran*
Anupam Puri*
T N Manoharan*
Name
M Rajyalakshmi*
Ravindra Kulkarni*
Ulhas N Yargop
Bharat N Doshi
Vineet Nayyar
*Independent
Exhibit 13: Auditors
Name
Deloitte Haskins & Sells LLP
Type
Statutory
Exhibit 14: MOSL forecast v/s consensus
EPS
(INR)
FY15
FY16
FY17
MOSL
forecast
133.2
165.5
204.0
Consensus
forecast
128.0
162.4
192.1
Variation
(%)
4.1
1.9
6.2
26 February 2015
11

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