Tech Mahindra to manage IT operations for Ahlstrom

Brokerage recommends 'accumulate' for Tech Mahindra

Tech Mahindra today said it has signed a letter of agreement with Finland-based Ahlstrom to manages its information technology solutions.

The multi-year, multi-million Euro contract with Ahlstrom is aimed at increasing efficiency, harmonise service levels and lower IT costs, the Mumbai-based IT company said in a BSE notification.

As per the agreement about 50 Ahlstrom IT employees globally will be moved to Tech Mahindra on Dec 1, subject to country specific conditions.

"This agreement will help us provide a wide array of future opportunities for the Ahlstrom IT professionals globally while helping us with enabling our innovative service offerings for the customers in the region,"the release quoted Rajesh Chandiramani, head of enterprise business --continental Europe, Tech Mahindra as saying.

Tech Mahindra generates 31 percent of revenues from Europe and has presence in 20 countries with over 2,900 employees across.

According to the management, the deal size exceeds $50 million, Angel Broking said. Under the agreement, Tech Mahindra has got into a 5-year contract, along with a 2-year extension.

"The company mentioned that on back of deal, the margins might take a hit. We upgrade the company's EPS up by 8.8 percent for FY2016. We recommend our accumulate recommendations with a target price of Rs 2,788," Sarabjit Kour Nangra, vice president research - IT at Angel Broking was quoted as saying.

Today, shares of Tech Mahindra ended at Rs 2,468, down 0.11 percent on the BSE.