Tech Mahindra gains on report of strong growth outlook

Tech Mahindra rose 1.66% to Rs 2,348.35 at 11:52 IST on BSE after a media report suggested that the company expects its digital unit to contribute more than $500 million to revenue by 2015.

Meanwhile, the BSE Sensex was down 13.43 points, or 0.05%, to 26,423.59.

On BSE, so far 39,000 shares were traded in the counter, compared with an average volume of 63,427 shares in the past one quarter.

The stock hit a high of Rs 2,351 so far during the day, which is also a record high for the counter. The stock hit a low of Rs 2,300 so far during the day. The stock hit a 52-week low of Rs 1,259.40 on 16 September 2013.

The stock had outperformed the market over the past one month till 25 August 2014, rising 6.15% compared with 1.19% rise in the Sensex. The scrip had also outperformed the market in past one quarter, rising 29.57% as against Sensex's 7.06% rise.

The large-cap IT company has an equity capital of Rs 234.91 crore. Face value per share is Rs 10.

According to the report, Tech Mahindra expects its digital unit to contribute more than $500 million to revenue by 2015, as the company moves towards its goal of achieving a $5 billion top line by that time.

The market for digital offerings is growing for IT service players as companies look to tap social media, mobility solutions, analytics and cloud-based deployment - grouped under the acronym SMAC - to gain insights and tailor services based on customer requirements, the report suggested.

Tech Mahindra's digital unit includes also technologies related to network, security and sensors that comprise the Internet of Things, an idea of connecting almost everything online, the report added. The company uses the acronym NMACS for these technologies.

Tech Mahindra, which has targeted growing revenue to $5 billion by 2015, expects 10% of that coming from the NMACS focused unit.

On a consolidated basis, Tech Mahindra's profit after tax rose 2.7% to Rs 631 crore on 1.3% growth in revenue to Rs 5122 crore in Q1 June 2014 over Q4 March 2014. Operating profit (earnings before interest, taxes, depreciation and amortization) declined 13.4% to Rs 928 crore in Q1 June 2014 over Q4 March 2014. The company's cash and cash equivalents as on 30 June 2014 stood at Rs 3669 crore.

Tech Mahindra offers information technology services and solutions.

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