TECHNICAL RESEARCH
Date:- 16/4/2013
Positional Dual call
Script name – TECH MAHINDRA LTD
Technical call – Buy TECHM @ 960-975 sl 950 target 1080-1150
If break 950 and close below 950 then sell TECHM below 950 sl 1020 target 840-770
Holding period – 2-3 months
Technical view – TECHM having 100MA level at 985 level but still its not able show any major weakness below this level and created support at 950 level so once it able to stay above 100MA for 2-3 trading session then it will surly give some up move.
Recently its RSI also touched oversold zone and started to move up so this is also indicating that if price sustain upside then up move is sure.
Recently its STOCHASTIC also touched oversold zone and bouncing now, so its not breaking support level of price chart then we can expect up move in this.
Currently all the indicators are showing some support in TECHM now so if its price started closing below 850 level then it can confirm the downtrend on price chart as well as in given indicators also.
FUNDAMENTAL ANALYSIS
Started as Mahindra British Telecom (MBT) in 1986 as a 60-40 Joint Venture (JV) between Mahindra and Mahindra (M&M) and British Telecom (BT), Tech Mahindra focused exclusively on the telecom vertical with BT initially contributing 100% of its revenues. This revenue contribution from BT reduced to 72% at the time of IPO in July 2006. In April 2009, Tech Mahindra acquired 42.7% stake in the then troubled Satyam Computer Services for Rs 3,000 crore by purchasing 502 million equity shares at Rs 58 per share. Tech Mahindra has brought stability into Satyam’s business and since then Satyam has not seen any major client attrition.
Triggers
– Integrating Satyam will enable Tech Mahindra to participate in large deals, offer a strong expertise spread over different verticals and service lines and cross sell its service offerings to a much wider client base and eventually reduce dependence on British Telecom and AT&T.
– Over the last few years, the company has been successful in scaling up its Non-BT revenues. This has not only helped it offset the decline in BT revenues but also post an overall growth for the company.
– Recent acquisition of 100% stake in Hutchison Global services (sales of USD 170 million expected per year for the next five years) and 51% stake in Comviva (sales of USD 70 million in FY11) by Tech Mahindra would further improve growth and enhance service offerings.
– Acquisition of 51% stake in Complex IT by Mahindra Satyam in Feb 2013 for $23 mm to strengthen Enterprise offerings and expand presence in Brazil.
Concerns
– Legal cases pending against Mahindra Satyam would remain an overhang in the short term.
– Any aggressive ramp down by top client BT would drag down revenue growth.
Valuation:
Over the years, the company has been consistently performing with key wins and partnerships, supplemented by non organic initiatives. Going forward the financial performance of the company is expected to improve on the back of recent acquisition and management restructuring programme. The company plans to double its revenue by 2015 and aims to become the top three ITcompanies in the country by 2021.