Tech Mahindra IPO

Looks like a good IPO to me
1) The offering is in the range of PE 15.5-17.7x which is attractive.
2) The company has shown strong growth 30% yoy (for past 3 years) and should continue to do so.
3) For the first quarter, it had a revenue of 587 crore and a profit of 106 crore which is a healthy profit margin. Plus balance sheet did not show an irrational rise in other income to temporarily raise the EPS.
4) The main promoter Mahindra group is a respected firm and should do good for the company
5) The major client British telecom (69% of revenue) has huge stakes in this venture, so is unlikely to leave the company in near future.
1) huge reliance on one major client
2) high attrition rate, and the company is just another outsourcing firm.

Update: It got oversubscribed on the first day, and closed with an oversubscription of 70.15 times. Which is an history in itself. Finally a good response after a long lull in the primary market.


It is expected to be listed on 29th Aug.

4 replies on “Tech Mahindra IPO”

I think Tech Mahindra is a good IPO. I am working in the UK, not in Tech Mahindra, but in a firm which has a lot to do with Telecom. I have many friends in Tech Mahindra here and also in the BT. Tech Mahindra is getting more independent from BT right from the time it has given up its name “Mahindra BT”. They are looking to add more clients in to their list thru’ vigorous business development activities and acquisition. BT on the other hand will have to depend on Tech Mahindra for its potential new projects like 21C Networks, VoIP and FTTx implementation. These service will have a lot of remote management features and most of them are centrally managed from the main exchange. These activities is expected to touch its peak in early 2008. One potential threat to the growth of this firm could be a market recession, but this will slow-down not only Telecom, all other industries.

Thanks for your enlighting comments. I have already invested in the IPO. I don’t know how much allotment I will get, but I am sure in a year timeframe it will give me good returns

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