UBS cuts Tech Mahindra stock target

UBS has cut target price of Tech Mahindra stock to Rs 550 from Rs 630 and maintained a 8216;sell8217; rating citing revenue concerns due to the ongoing negotiations with top client British Telecom.

Tech Mahindra management expects renegotiations with the company8217;s top client British Telecom BT 40 percent of revenue to continue over the next few quarters. Management expects revenue from BT to remain under pressure in the near term,which is likely to impact revenue growth in FY12/13,UBS said in a note.

However,the higher revenue contribution from BPO is likely to impact profitability and continue to push down margins over the medium term,UBS said and indicated it expects the merger of Satyam with Tech Mahindra in mid-2012.

At 1.04 p.m,the stock was at 558 rupees,down 2.5 percent.

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