Tuesday, June 30, 2009

>TECH MAHINDRA (CITI)

Takeaways from India Investor Conference, June 24-26

Takeaways from Mumbai — Tech Mahindra presented at our India Investor Conference on June 25. Below are key takeaways from management.

BT Business — On BT business, the uncertainty continues. Tech Mahindra's focus is on maintaining market share. Project Andes should start in Q1FY10.

Non-BT business — Management is more optimistic here as it is seeing some good signs. Clients are awarding new projects – these are small as of now, but even small projects were not happening previously.

Future outlook — (1) Plans to span the different horizontals (Applications, Security, Network Services, VAS, IMS and BPO) of the telecom vertical. (2) Focus is on account mining. Apart from BT, the focus on other accounts is to maintain or grow market share.

Initiatives at Satyam — The priorities for management are: (1) Customer retention – Management is meeting everyone to assure them of the long term viability of the business. (2) Cost rationalization – Initiatives like virtual pool creation, rationalizing costs on infrastructure, etc. A lot of customers have responded well.

Open offer issue — Management does not plan to hike the open offer price. If there is zero response then the TechM stake will go up to ~43%. The proposed QIP is to primarily pay off debt on the books (~Rs22b).

To see full report: TECH MAHINDRA

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