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Tech Mahindra is one of India’s leading software company with a large exposure (40% +) to the telecom vertical. The gradual implementation of 5G globally and increased data consumption will benefit the company and should be a big growth driver over the coming years. However, this opportunity is yet to fructify in terms of higher project engagements. With all major issues surrounding scaling down of revenues of acquired companies and challenges in the telecom vertical behind, the company is poised for decent topline growth once telecom spending picks up. Covid-19 pandemic has put focus on tech spending and we expect industry to benefit from this trend. Tech Mahindra has minimal exposure to highly affected segments viz., travel, retail and hospitality and with manufacturing (its second largest vertical ) picking up coming quarters may see steady revenues . It is for these reasons, we have an over weight rating on the back of higher 5G spending and attractive valuations – 28-07-2021 Price: 1119.50 Rating: Over Weight Recommendation: Buy

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