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Rajiv Kapoor is a Share Broker, Certified Mutual Fund Expert and MDRT Insurance Agent.

Tech Mahindra stock is a good buy

Mahindra & Mahindra Group Company, Tech Mahindra stock price was quoting at Rs 2,900 on the Indian Stock Exchanges during March 2015 prior to going ex bonus and split. It had subsequently issued bonus shares in the ratio of 1:1 and sub divided its stock from Rs 10 face value into two shares of Rs 5 each thereby resulting in its adjusted price working out to Rs 720. The Tech Mahindra stock had fallen to below Rs 500 levels on the back of unloading by bull operators. In an update released by the Tech Mahindra management, they issued a warning guidance that revenue and profit margins could be hit for the first quarter of FY 2016 due to high H1B visa costs for its employees and weak mobility business numbers. It clarified that the core communication sector could show a tepid performance in the near future due to a wave of consolidation happening in the telecom industry globally. As such, firms are in a transit mode wherein spending is getting reviewed and delaying decision making. While the company is a strategic IT vendor to many global blue chip organisations, we feel that these are temporary phases and ultimately it will benefit out of it in the medium term. Even as the GST Bill is stuck in Parliament and awaiting approval, IT majors are competing with one another to secure the biggest proposed government contract to build the IT back bend for GST roll out. While this could turn out to be the mother of all IT contracts in the sub continent, companies like TCS, Infosys, Wipro and Tech Mahindra are all in the fray and likely bidders. Currently the Tech Mahindra stock is quoting at Rs 550 and is a good contra purchase bet for an investment horizon of six months with at least 20% price appreciation on the cards. After a positive start on Friday, the domestic equity markets maintained their upward stance to end the week on a high note. The BSE Sensex and the CNX Nifty reclaimed the 28,000 mark and the 8,500 levels respectively to bring cheer to the Indian investors post the Chinese Yuan devaluation crisis. Going forward, our markets look set to trade next week in a range bound manner with profit booking emerging at higher levels.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.

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