15 December 2015

Update | Sector: Technology

Tech Mahindra
BSE Sensex
25,320

S&P CNX
7,701

CMP: INR520

TP: INR570 (+10%)

Neutral

Acquires Pininfarina: Automotive Design and Styling

SPV with M&M instead of outright buy; Limited impact on estimates
Stock Info
Bloomberg

TECHM IN

Equity Shares (m)

956.3

M.Cap.(INRb)/(USD b)

497.3/7.4

52-Week Range (INR)

750/459

1, 6, 12 Rel. Per (%)

1/0/-9

Avg Val. (INR m)

1,721

Free float (%)

63.3

Financial Snapshot (INR Billion)

Y/E Mar
2015 2016E 2017E
Sales
224.8 268.4 320.6
EBITDA

41.5

44.2

55.4

Adj. PAT

26.3

29.4

35.8

Adj. EPS (INR)

29.6

33.1

40.3

3.0

12.0

21.4

RoE (%)

24.5

22.1

22.8

RoCE (%)

27.1

23.0

26.2

Payout (%)

20.5

22.6

21.7

P/E (x)

17.6

15.7

12.9

EV/EBITDA (x)

10.2

9.6

7.4

EPS Gr.(%)

Acquires Italian auto design and engineering services firm Pininfarina

Shareholding pattern (%)

As on
Sep-15 Jun-15 Sep-14
Promoter
36.7
36.7
36.0
DII
12.0
11.1
10.6
FII
37.0
37.0
39.6
Others
14.3
15.2
13.7
FII Includes depository receipts
Stock Performance (1-year)

TECHM would be partnering M&M in an SPV to acquire a 76% stake in

Pininfarina, an Italian auto designing and engineering services firm, for
EUR25m. the SPV would be owned 60% by TECHM and 40% by MM.
The SPV would make an open offer for the balance 24% stake for EUR8m (at
EUR1.1 per share). Further, the SPV would infuse EUR20m into Pininfarina
via a rights issue before the end of 2016; this would imply a total outflow of
EUR53m, of which 60% would be attributable to TECHM.

Pininfarinaan iconic brand in car styling

Pininfarina is Italy-based company established in 1930. It has designed

vehicles for the likes of Ferrari, Alfa Romeo, Peugeot and Maserati.
It has also been involved in the design of high-speed trains, buses, yachts,
airplanes and private jets. The company also consults on industrial design,
interior design, architecture and graphic design.

Augments TECHM with Design and Engineering in Automotives

The acquisition equips TECHM with capabilities in design, user interface,

and customer experience, which could be utilized in any of the verticals it is
present in; this would aid its presence in Digital.
The acquisition also augments companys automotive presence in
automotive in Italy and Germany besides increasing the addressable market
for the combined entity to 30% of the total automotive outsourcing market.

M&Ms 40% stake confounds; Marginal EPS dilution in FY15

While acquisition of Design capability is not perplexing in the Digital world

which has seen Wipro buy DesignIt, Eclerx buy CLX and IBM buy Weather
company; M&Ms 40% stake in the transaction remains confounding.
Our FY17E revenue is up 2.2% on account of the integration of the
acquisition. Given the lower operating margin and onsite presence of
Pininfarina, the impact on TECHMs operating margin would be -30bp. The
acquisition is likely to be EPS dilutive to the extent of 0.7%.

Valuation and view

Amid consolidation activity in the telecom sector, deal cycles are stretched
driving outlook of tepid growth in ~50% of the business. TECHM trades at 15.7x
FY16E and 12.9x FY17E EPS, and the current growth challenges limit the
potential for re-rating. Our target price of INR570 discounts FY17E EPS by 14x,
10% upside to CMP. We maintain Neutral.
Ashish Chopra (Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424
Sagar Lele (Sagar.Lele@MotilalOswal.com); +91 22 3982 5585

Investors are advised to refer through important disclosures made at the last page 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

Event: Acquires Pininfarina, Auto design and engineering services firm

TECHM announced it would be partnering MM to acquire a 76% stake in Pininfarina,
an Italian auto designing and engineering services firm, for EUR25m. TECHM and
MM would form an SPVowned 60% by TECHM and 40% by MM.

Consideration: EUR25m for 76% @ EUR1.1 per share

The transaction would take place in three steps:

TECHM and M&M will form an SPV, which would acquire 76% in Pininfarina
from Pincarthe promotersfor EUR25.3m.
An open offer would be made for the balance 24% stake at EUR1.1 per
share, entailing a maximum outgo of EUR8m.
The SPV would invest EUR20m in the company via a rights issue before the
end of 2016.
Thus, the total maximum consideration in the deal would be EUR53mof which
60% would be attributable to TECHM.
While the deal has been agreed upon at a significant discount to CMP, it has
been externally validated and agreed upon by both the parties. TECHM does not
envisage shareholder approval concerns as potential constraints in the deal.
The net debt on the companys books is to the tune of EUR45m. The SPV would
provide a corporate guarantee of ~EUR114.5m to the lenders. Pininfarina has
entered into a debt restructuring agreement and certain portion of the debt has
been rescheduled until 2025. The restructuring is under the Italian guidelines
and bakes in a margin of safety. TECHM expects Pininfarinas cash accruals to
take care of the repayment.

About Pininfarina: ~EUR87m CY14 revenue, 8% EBITDA margin

In CY14, Pininfarina had revenues of EUR86.6m, reported EBITDA of EUR7m

(8.1% EBITDA margin), and a net loss of EUR1.3m
The company is in a transitory phase and is undergoing some restructuring,
which has affected CY15 performance
9MCY15 revenue stands at EUR60.7m, a decline of 6% due to smaller
contribution from the design and engineering services segments.
EBITDA is negative due to sale of IP rights in 2014 and provision for restructuring
in 2015.
The company expects 5% YoY decline in revenue in 2015, and negative EBITDA.
The company has ~650 employees, mostly based out of Italy and Germany.
60% of Pininfarina revenue comes from early-stage engineering services, and
40% from pure design.
Europe accounts for 65% of Pininfarinas revenue.

Rationale: To provide more end-to-end services

15 December 2015

The acquisition gives TECHM not only an iconic brand, but also best-in-class
design and styling capabilitieswhich are imperative in the Digital world. 60% of
the revenues for Pininfarina came from early-stage engineering services, and
40% from pure design. The engineering services work does not overlap with that
at TECHMtotal overlap is only ~5%.
Europe accounts for 65% of Pininfarinas revenue. Expanding reach to Americas
and APAC was high on the companys agenda; TECHMs reach will enable
2

Tech Mahindra

Pininfarina to achieve this objective. Also, TECHM believes there is potential to

cross sell services to each others customers.
With the acquisition, the combined entity can address 30% of the total
automotive outsourcing marketwhich is USD2.5b-3b out of USD8b-10b. Nearly
one-third of TECHMs revenue in manufacturing came from engineering
services; out of 100 customers, it had 25 automotive tier-I OEMs.
Another key aspect is the automotive industry in Germany which is in the early
stages of embracing outsourcing; TECHM is now well equipped to capitalize on
the same.

M&Ms 40% stake confounds; Marginal EPS dilution in FY15

While acquisition of Design capability is not perplexing in the Digital world which
has seen Wipro buy DesignIt, Eclerx buy CLX and IBM buy Weather company;
M&Ms 40% stake in the transaction remains confounding.
Our FY17E revenue is up 2.2% on account of the integration of the acquisition.
Given the lower operating margin and onsite presence of Pininfarina, the impact
on TECHMs operating margin would be -30bp. The acquisition is likely to be EPS
dilutive to the extent of 0.7%.

Exhibit 1: Change in estimates

Revised
FY16E
FY17E

15 December 2015

Earlier
FY16E
FY17E

Change
FY16E

FY17E

INR/USD

65.3

67.0

65.3

67.0

0.0%

0.0%

USD Revenue - m

4,110

4,785

4,110

4,682

0.0%

2.2%

USD rev Gr.(%)

12.2

16.4

12.2

13.9

0bp

250bp

EBIDTA Margin (%)

16.5

17.3

16.5

17.6

0bp

-33bp

EBIT Margin (%)

13.6

14.7

13.6

15.0

0bp

-30bp

EPS- INR

33.1

40.3

33.1

40.5

0.0%
-0.7%
Source: Company, MOSL

Tech Mahindra

Valuation and view: Expect continued growth leadership with stable

margins
TECHM's industry-leading growth performance on organic basis has taken a hit
since the end of FY15led by the communications vertical, which contributes
over 50% to total revenue. Near-term softness in telecom is expected to
continue as the industry is going through a consolidation phase, affecting IT
budgets and decisions around spending. Stretched deal cycles are driving
outlook of tepid growth in the vertical.
We expect structural strengths in TECHM's business to drive growth over the
medium to long term, led by the following factors:
1. Success in large deal wins in the enterprise segment is an encouraging
indicator of improving competitive prowess. TECHMs expertise in the
telecom vertical had thus far overshadowed the structural concerns in the
client industry, as it increased its share within its top accounts.
2. Network management services have expanded the addressable market for
TECHM, with directly addressable spend standing at ~USD40b. Going
forward, opportunity will come from increased adoption of offshore services
by Continental Europe.
3. TECHM also has a sizeable scale in engineering services, and the opportunity
in the same can be leveragedespecially after the acquisition of Mahindra
Engineering Services (MES)
Profitability is seeing a gradual recovery after hitting the lowest EBITDA margin
post the Satyam integration. Improvement of operational parameters, cost
optimization methods, automation and industrialization, pyramid
rationalization, offshoring and integration of acquisitions leave more room for
improvement in the medium term. TECHM has demonstrated impressive
capabilities in successfully integrating companies in the past, and we believe it
will be able to drive gradual recovery in profitability going forward.
We expect TECHM to grow its USD revenue at a CAGR of 14.3% over FY15-17
and EPS at a CAGR of 16.6% during this period. TECHM trades at 15.7x FY16E
and 12.9x FY17E EPS. Given the decline in margin in FY16 and below-industry
organic revenue growth, we believe 14x for now will be the peak multiple for
TECHM. Our target price of INR570 discounts FY17E EPS by 13.2x, 10% upside to
CMP. Maintain Neutral.

Exhibit 2: TECHM 1-year forward PE chart

PE (x)
Median(x)

100

Peak(x)
Min(x)

80

Exhibit 3: TECHM 1-year forward PB chart

Avg(x)

Peak(x)
Min(x)

Avg(x)
17.6

15.0

78.8

60

PB (x)
Median(x)

20.0

10.0

15 December 2015

Dec-15

Jan-15

2.9
Feb-14

Jun-09

Jul-08

Aug-07

Aug-06

Dec-15

Jan-15

Feb-14

Feb-13

Mar-12

Source: Company, MOSL

3.0

1.2

0.0
Apr-11

Jun-09

Jul-08

Aug-07

Aug-06

May-10

3.8

4.2

5.0

Feb-13

14.0

Mar-12

12.1

Apr-11

16.6

20

May-10

40

Source: Company, MOSL

Tech Mahindra

Story in charts
Exhibit 4: Telecom prowess reflected in vertical mix

Exhibit 5: Scale and diversity lent by Satyam acquisition

Vertical mix (%)

Revenue (USD m)

Others, 6.0

Telecom,
52.0

Manufactur
ing, 18.4

8.9

8.8

977

1,063

1,156

FY10

FY11

FY12

5.4

(0.9)

985
FY09

17.7

18.2

2,633

3,098

3,664

FY13

FY14

FY15

Source: Company, MOSL

Exhibit 7: BFSI expected to bounce-back in 3Q

Deal TCV (USD m)

BFSI
400

220

190

270

250

270

300

220

5.8

6.4

5.7

3.8

67.3

125

-0.9
87.3

90.6 89.6 98.9 97.1

Source: Company, MOSL

Exhibit 8: Margin recovery has begun after a sharp fall

Source: Company, MOSL

Exhibit 9: Significantly aided by utilization

EBITDA margin (%)

21.9 21.5 21.7

Utilization (incl Trainees)

Utilization (excl trainees)

82

23.3 23.2
21.2

20.5 21.1

-1.9

-1.1

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

71.3 78.3 83.3 88.1

1QFY14

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

-3.6
1QFY14

10.4

9.9

2QFY16

500

Growth (QoQ %)

3QFY15

Exhibit 6: Deal wins in line with previous quarters

Source: Company, MOSL

1QFY16

Tech,
Media, Ent,
7.8

YoY Growth (%)

127.7

4QFY15

Retail,
Travel,
Logistics,
6.2
BFSI, 9.6

79

20.2 20.3
18.3

76
15.3 15.0

16.6

73

Source: Company, MOSL

15 December 2015

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

1QFY13

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

1QFY13

70

Source: Company, MOSL

Tech Mahindra
Exhibit 10: Operating metrics
Operating metrics
Revenue by geography (%)
Americas
Europe
Rest of World

1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16
45.1
32.4
22.5

44.2
33
22.8

47.1
30.9
22

44.9
30.6
24.4

46.8
31.1
22.1

49.1
31.2
19.8

48.8
31.4
19.8

45.4
29.8
24.8

47.7
29.4
22.9

48.9
29.3
21.9

Vertical Split (%)

Telecom
Manufacturing
Tech | Media | Entertainment
BFSI
Retail | Transport | Logistics
Others

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

55.3
16.5
7
9.1
6.2
5.9

52.7
17.1
7.3
10
6. 5
6.5

52.9
16.7
8.2
9.6
6.0
6.6

Onsite-offshore mix (%)

Onsite
Offshore

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

61.1
38.9

61.0
39.0

61.7
38.3

Client metrics
No. of active clients
% of repeat business

567
97

576
95

605
92

629
88

632
99

649
97

674
95

767
82

770
99

788
97

No. of Million $ clients

USD1m+
USD5m+
USD10m+
USD20m+
USD50m+

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

291
96
56
35
13

296
101
60
36
13

298
102
62
36
14

12
37
12
11

36
12
13

37
12
12

38
13
12

37
13
12

40
11
12

37
12
12

33
12
12

33
11
13

32
11
13

53,337
23,269
6,457
83,063

55,432
23,225
6,577
85,234

57,601
23,213
6,585
87,399

60,997
21,830
6,614
89,441

64,095
21,936
6,698
92,729

66,175
22,433
6,701
95,309

14
76
78

14
75
77

15
75
77

15
74
78

16
72
75

18
73
76

19
74
78

97
125.7
615.4
41.2

102
53.5
522.7
23.8

100
55.3
559.7
21.2

96
60.6
600.6
44.6

102
14.3
609.7
43.6

102
10.2
556
38.5

100
10.2
668.4
53.5

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)

15 December 2015

67,592 72,952 71,997 71,657

23,566 22,693 24,394 26,513
7,065
6,851
7,636
7,282
98,009 103,281 103,673 105,235
19
71
74

19
74
75

20
77
79

108
104
113
130.2
112
125.7
532.5
514
526.3
40.0
30.9
41.4
Source: Company, MOSL

Tech Mahindra
Exhibit 11: Operating metrics
Operating metrics
Rupee USD Rate
Period closing rate
Period average Rate

1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16
59.39
56.57

62.61
62.91

61.81
61.92

59.92
61.46

60.18
59.87

61.5
60.94

63.04
62.15

62.5
62.07

63.64
63.63

65.58
65.40

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

51.1
12.9
12.6
4.6
18.9

51.1
13.2
11.7
5
18.9

52.4
12.7
11.8
4.5
18.5

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

187.3
102.1
1370.2
66

Verticals (QoQ)
Telecom
Manufacturing
Tech | Media | Entertainment
BFSI
Retail | Transport | Logistics
Others
Total

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

15.7
-10.8
2.1
-1.1
3.1
6.5
6.5

-4.2
4.2
4.8
10.4
4.6
9.9
0.5

2.6
-0.2
14.8
-1.9
-4.9
4.6
2.2

Revenue by geography (QoQ)

Americas
Europe
Rest of World
Total

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

-0.9
1.0
33.4
6.5

5.6
-0.8
-7.2
0.5

4.8
1.9
-2.2
2.3

Client concentration (QoQ)

Top 5
Top 6-10
Top 11-20

-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

-5.0
6.5
6.5

0.5
-7.9
8.9

-0.9
2.2
2.2

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

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)

Net additions
Software professionals
BPO
Sales and Support
Total

15 December 2015

185 166.8
103 105.8
1459.3 1504.5
68.5
66.6

-340
5,360
-955
-873
1,701 2,119
-217
785
-354
5,272
392 1,562
Source: Company, MOSL

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 (%)

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
Change (%)

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

15 December 2015

2010

2011

2012

2013

2014

2015

876

45.5
2,194

47.5
2,463
74,116

54.4
2,633
83,109
8,993
31,678
73.1
90.5

60.8
3,098
89,441
6,332
34,638
73.1
90.3

61.4
3,664
103,281
13,840
35,471
69.9
91.7

2010

2011

2012

2013

2014

2015

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
-34.9

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
7.4

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
31.1

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
95.9

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
41.8

224,779
19.4
183,635
41,144
18.3
6,079
297
1,006
35,774
9,472
26.5
26,302
310
25,992
-3.5
0
25,992
0.6

2010

2011

2012

2013

2014

2015

1,223
25,268
26,491
139
13,672

1,260
32,254
33,514
159
12,227

1,275
42,032
43,307
0
11,266

40,302
6,043
30,145

51,737
6,170
29,080

54,573
6,868
35,876

276

638

998

19,346
10,420
2,187
6,725

23,455
12,468
2,666
8,315

20,437
13,172
2,418
4,845

14
16,342
3,004
42,676

6
8,711
14,744
51,737

2
11,235
9,202
54,573

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

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

4,804
117,682
122,486
1,604
11,287
12,304
147,681
40,329
12,987
12,755
3,901
306
122,526
52,059
24,049
18,728
8,041
19,649
50,800
71,726
147,680

2016E
65.3
4,110
114,416
11,135
35,923
75.2
92.4

2017E
67.0
4,785
130,474
16,058
36,676
77.4
92.4

(INR Million)
2016E
2017E
268,357
19.4
224,195
44,162
16.5
7,710
750
3,780
39,482
9,827
24.9
29,655
210
29,445
13.3
0
29,445
13.3

320,612
19.5
265,186
55,426
17.3
8,263
716
1,977
48,424
12,348
25.5
36,076
320
35,756
21.4
0
35,756
21.4

(INR Million)
2016E
2017E
4,812
139,166
143,977
1,703
10,935
12,304
168,919
42,155
13,216
12,361
4,775
517
136,810
58,447
23,092
18,584
13,244
23,442
47,638
89,172
168,919

4,812
165,008
169,820
1,703
7,700
12,304
191,527
43,892
16,716
12,361
4,775
517
160,992
69,257
32,192
18,584
13,244
27,715
54,449
106,543
191,527

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

2011

2012

2013

2014

2015

2016E

2017E

13.5
12.6
15.2
54.1
0.9
6.9

14.1
13.6
16.3
66.5
1.0
7.4

18.2
17.6
20.7
84.9
1.0
5.7

22.5
22.0
28.2
81.4
5.0
23.1

31.6
30.7
36.9
112.3
5.0
16.3

30.2
29.3
36.1
142.2
6.0
20.5

34.0
33.1
41.8
166.4
7.5
22.6

41.3
40.3
49.6
196.2
8.8
21.7

17.0
14.1
9.3
2.1
4.6
1.0

17.8
14.4
10.2
1.9
3.7
1.2

15.7
12.4
9.6
1.6
3.1
1.4

12.9
10.5
7.4
1.3
2.7
1.7

30.7
30.8

25.7
18.4

26.0
14.3

32.6
35.3

36.4
34.7

24.5
26.8

22.1
23.0

22.8
26.2

77
4.5

86
4.0

85
3.9

60
5.8

75
7.0

78
6.0

75
5.7

73
6.4

0.5

0.4

0.3

0.2

0.1

0.1

0.1

0.0

Cash Flow Statement

Y/E March

2010

2011

2012

2013

2014

2015

CF from Operations

9,549

15,717

3,692

14,259

33,935

32,040

34,139

42,758

Change in Working Capital

2,283

-11,261

7,778

-7,608

-12,302

-8,874

-13,590

-11,414

21,634

23,167

20,550

31,344

Other adjustments
Net Operating CF
Net Purchase of FA

(INR Million)
2016E
2017E

37,353
11,832

4,455

11,470

6,651

-4,069

541

-2,836

-3,099

-7,854

-21,365

-16,773

-11,044

-29,868

1,606

-9,632

-5,039

-16,393

-30,415

-12,132

-11,707

1,670

-3,548

-528

1,032

19

2,469

13,672

-1,445

-961

-7,036

-1,305

2,396

-885

-624

-501

-590

-597

-750

-5,381

-6,771

-8,497

-9,913

Cash Flow from Fin.

14,841

-5,582

-2,086

-6,754

-6,668

-1,905

-9,374

-10,537

Net Cash Flow

-3,195

479

-248

32,211

-1,427

-9,154

-956

9,099

5,382

2,187

2,666

2,418

34,629

33,202

24,048

23,092

Net Cash from Invest.

Inc./(Dec) in Equity
Proceeds from LTB/STB
Dividend Payments

Opening Cash Balance

Add: Net Cash
Closing Cash Balance
E: MOSL Estimates

15 December 2015

-3,195

479

-248

32,211

-1,427

-9,154

-956

9,099

2,187

2,666

2,418

34,629

33,202

24,048

23,092

32,191

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