Tech Mahindra surges on reports of domestic brokerage retaining accumulate rating

Tech Mahindra surged 7.25% to Rs 514 at 11:50 IST on BSE on reports a domestic brokerage has raised its price target on the stock while retaining its accumulate rating in the wake of the company's strong Q4 March 2016 results.

Meanwhile, the S&P BSE Sensex was up 389.38 points or 1.54% at 25,694.85.

On BSE, so far 6.53 lakh shares were traded in the counter as against average daily volume of 1.62 lakh shares in the past one quarter. The stock hit a high of Rs 548 and a low of Rs 494.50 so far during the day. The stock had hit a 52-week high of Rs 668.75 on 25 May 2015. The stock had hit a 52-week low of Rs 407.50 on 29 February 2016. The stock had outperformed the market over the past one month till 24 May 2016, sliding 0.16% compared with Sensex's 2.06% fall. The scrip had also outperformed the market in past one quarter, surging 13.74% as against Sensex's 9.6% rise.

The large-cap company has equity capital of Rs 485.26 crore. Face value per share is Rs 5.

The domestic brokerage reportedly said that Tech Mahindra remains its top pick among Tier I offshore IT services firms, with results providing early evidence of improvement in operational/financial performance.

Tech Mahindra's consolidated net profit rose 18.15% to Rs 897 crore on 2.72% rise in revenue from services to Rs 6883.70 crore in Q4 March 2016 over Q3 December 2015. Earnings before interest, taxation, depreciation and amortization (EBITDA) rose 2.2% to Rs 1161.30 crore in Q4 March 2016 over Q3 December 2015. The EBITDA margin dropped to 16.87% in Q4 March 2016 from 16.95% in Q3 December 2015. The result was announced after market hours yesterday, 24 May 2016.

Meanwhile, the company has dropped its plan to set up a payments bank. The company had received in-principle approval from the Reserve Bank of India in August 2015 for setting up a payments bank.

Tech Mahindra is a specialist in digital transformation, consulting and business re-engineering solutions.

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