ICICIdirect has maintained 'Buy' on Tech Mahindra with price target of Rs 3,000 as against current market price (CMP) of Rs 2,675 in its report.

Commenting on the investment rationale, the stock broker said, "Tech Mahindra has announced the acquisition of the US based LightBridge Communication (LCC), a global network engineering service provider, for an enterprise value of USD 240 million. The deal values LCC at 0.6x CY14 sales and 7x EBITDA. With this acquisition, Tech Mahindra likely filled in 72% of the USD 600 million deficit in its USD 5 billion run-rate goal. Recall, Tech Mahindra is targeting organic revenues of USD 4.4 billion with USD 600 million filling the deficit to its aspirational goal. Further, the acquisition could help Tech Mahindra accelerate growth in the USD 41 billion network services market opportunity.

We estimate Tech Mahindra will report revenue, earnings CAGR of 22%, 12% over FY14-16E (average 19.1% EBITDA margins in FY15-16E), vs. 13%, 19% reported during FY08-13 (average 21.9%), driven by order bookings, large deal ramp-ups and acquisition contribution. We continue to value Tech Mahindra at 17x its FY16E EPS."

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