Tech Mahindra shares end 4.71% down post Q3, but brokerage sees 22% upside

Shares of Tech Mahindra shed over 5 per cent in trade on Tuesday after the fifth-biggest software exporter posted a 5.7 per cent decline in December quarter net profit at Rs 759.2 crore, pulled down by a margin squeeze due to its acquisitions during the quarter.
   
The stock hit an intraday low of Rs 473.00, down 5.17 per cent on the Bombay Stock Exchange (BSE).

The Mahindra Group company had registered a post-tax profit of Rs 805.3 crore in the same quarter of previous fiscal year.

Its overall revenues surged 16.50 per cent during the quarter to Rs 6,701.1 crore, but operating profit declined to Rs 1,135.9 crore from Rs 1,170 crore.

Its chief financial officer Milind Kulkarni explained that this is mainly due to acquisitions, saying the pre-tax margins have come down to 16.3 per cent for the reporting period from over 19 per cent. He said work is under way to make the acquired assets perform better and hoped that Lightbridge Communications, one of its biggest acquisitions recently at $240 million, will perform better from next fiscal year.

Meanwhile, brokerage firm Angel Broking remained positive on the Tech Mahindra stock with a price target of Rs 646, an upside of 22.78 per cent against Monday's closing of Rs 498.80.