Tech Mahindra Q3FY21 revenue was in line to our forecast, EBIT margin was a big beat. Revenue grew by 2.8% QoQ in CC (+3.4% QoQ in USD terms). EBIT margin improved by ~173bps QoQ to 15.9% (8-quarter high) and was a big beat to our forecast. EPS of Rs 15, +22.9%/+14% QoQ/YoY was also a big beat to our forecast. In Q3FY21, TECHM has secured large deals with net-new TCV of USD 455 million. TECHM confirm that the deal pipeline remains robust and it is confident of TCV improving in Q4 and beyond.

Commenting on the result review, IDBI Capital said, "We factor Q3FY21 beat, largely maintain our revenue forecast and increase FY21/22/23E EBIT margin forecast by 122bps/176bps/134bps to 13.9%/14.2%/14.1% and EPS by 7.9%/10.8%/7.8%. We now forecast revenue/EPS CAGR of 8.9%/11.3% over FY21-23. We now value the stock at 17x FY23E (16x earlier), vs. 1-year forward PER range of 8x-18x in the last 5-years, and increase TP to Rs1,108. We upgrade the stock to Buy from Accumulate earlier."

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