Tech Mahindra’s growth prospects looking strong due to deal wins, demand: Analyst

Elara Securities said in a note that the analysts’ meeting included a positive outlook on the CME vertical, led by 5G efforts, stability of the improved big deal trajectory and continued momentum in Business Process Services (BPS). Company’s analyst meeting.

“Tech Mahindra has increased its focus on account management of top 100 customers, resulting in a 3x improvement in the overall contract price trend since FY18. The focus on sustaining big deal wins is evident as some of the recent Big deal wins were its biggest wins across those segments (bps, healthcare vertical). Big deal wins have become a consistent trend,” Elara Securities said.

Its deal pipeline in the manufacturing vertical has tripled in the past year and comprises 30% of the total pipeline (the manufacturing vertical forms 16% of revenue). “Furthermore, 50% of the manufacturing vertical is automotive and 50% of the services structure of the vertical is ER&D. Both are expected to drive growth,” Elara Securities said.

“Tech Mahindra expects growth to be driven by increased investment in identified growth verticals (Healthcare & Lifesciences, HiTech), competencies (cloud, digital engineering, experience design, 5G) and SaaS platforms (Factorial, Yabux, Healthnext). Must support Tech Mahindra’s drive to accelerate growth through cloud, AI, cyber security, 5G, digital engineering, digital transformation and customer experience, and programmatic M&A with a focus on data and analytics,” MK Research said.

The company has spent $640 million in M&A since 2019 and the acquired businesses reported a revenue CQGR of 8.7% (from pre-acquisition revenue run rate to Q2 FY22 run rate).

Tech Mahindra has increased the number of freshers and is also focusing on Tier-II cities and nearby locations to meet the supply-side challenges. It had hired 5,000 employees in the September quarter.