Tech Mahindra rallies in July on cheap valuations

Reuters Market Eye - Cheap valuations of Tech Mahindra Ltd shares relative to its industry peers even after the company became India's No. 5 IT services provider after its merger with Satyam Computer Services , are seen driving up the stock in July, analysts say.

The company completed the merger of its unit Satyam Computer Services with itself on June 25.

Tech Mahindra's shares are up 0.2 percent at 2.46 p.m. They have gained 10 percent in July as of Monday's close.

The stock is trading at a discount of 34.2 percent to HCL Technologies Ltd valuations on price-to earnings multiples, according to StarMine estimates.

Analysts are also hopeful that the combined entity after the merger of Mahindra Satyam would have EBITDA margins of around 21 percent, only a shade below that of HCL Tech at 22 percent.

(Reporting by Abhishek Vishnoi)