Tech Mahindra shares likely to rebound after blockbuster deal with AT&T

In comparison, its larger rivals Tata Consultancy Services and Infosys saw their stock surge 14% and 24%, respectively, this year. The S&P BSE IT …

MUMBAI (NewsRise) — Indian software exporter Tech Mahindra‘s big-ticket outsourcing deal with AT&T could breathe fresh life into the Mahindra Group company’s shares, as it potentially bulks up the sagging communications business and raises the prospects of strong revenue growth.

Mumbai-based Tech Mahindra’s shares have lost 2.4% since the beginning of 2019 after they gained 43% last year. In comparison, its larger rivals Tata Consultancy Services and Infosys saw their stock surge 14% and 24%, respectively, this year. The S&P BSE IT index added 13% during this period.

Tech Mahindra’s shares have underperformed its rivals and the BSE IT Index as its weak earnings growth in the past two quarters raised concerns among investors about a further decline in margins.

However, the new deal could help the stock recover. Last week, Tech Mahindra announced one of its largest-ever project wins that could be worth $1 billion over the next four to five years. The contract entailed migration of the U.S. telecom behemoth’s traditional operational and support software systems to cloud and drawing up its software-defined network for the next-generation cellular technology. Tech Mahindra declined to give any financial details of the deal.

The deal is likely to give a fillip to Tech Mahindra’s financial performance, which has been lackluster in the past two quarters as the company struggled with client-specific issues and declining investments from automobile and financial services businesses.

Analysts say revenue growth is crucial for Tech Mahindra to expand its margins. The announcement of AT&T deal comes “as a booster to that effect,” Motilal Oswal said in a report.

The project also underscores the strong deal momentum in the communications industry as operators prepare to modernize their infrastructure ahead of the launch of 5G mobile phone services.

Brokerage Edelweiss expects the deal to catapult Tech Mahindra’s communications revenue — which accounts for over 40% of its overall revenue — to 12% over fiscal year 2019 to 2021 from 6.5%.

“While the deal ramp-up and transition may pressure margins, the potential for a re-rating of the stock is significant too as this landmark deal would boost the company’s single-digit growth estimates currently,” it said. Edelweiss has a target price of 935 rupees on the stock.

“We see this deal as an investment that Tech Mahindra is making to get a large referenceable project to market to the global telecom universe that is at the cusp of pivoting to the 5G era,” Nirmal Bang said in a report Monday. The deal also augurs well for other Indian IT companies such as Tata Consultancy Services, Infosys, and Wipro which have substantial exposure to the communications sector and have partnerships with AT&T.

Tech Mahindra shares fell 1.3% to close at 703.70 rupees in Mumbai trading on Wednesday, while the benchmark S&P BSE Sensex gained 0.3%.

–Dhanya Ann Thoppil

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Indian Tech Mahindra explores blockchain application in finance and insurance

An Uplink-based solution provides the financial management industry with an open-source distributed ledger technology platform that drastically …

Indian multinational technology company Tech Mahindra is all set to test blockchain application in finance and insurance services by collaborating with American tech firm Adjoint, telecom news agency CommsMEA reports on Monday.

Bringing blockchain to the finance and insurance sector will prove to be game-changing as it is the first-of-its-kind initiative to ensure customers get a trustworthy and seamless experience.

Moreover, one billion dollars ($1 billion) worth of risk management banking can save customers up to four million dollars ($4 million).

Introducing blockchain application in finance and insurance

An Uplink-based solution provides the financial management industry with an open-source distributed ledger technology platform that drastically enhances the efficiency of transactions through increased security and speed.

With the messaging and consensus protocol mechanism, the users will be able to verify the data input mode on the blockchain ledger and eliminate the possibilities of incorrect or double entries. As a matter of course, this will radically transform the data quality and reliability as the system, in a way, empowers its users with responsibility for their data accuracy.

As blockchain boasts of tamper-proof and transparent data sharing, the auditors’ jobs will be made easy by giving direct access to the records for verification of compliance.

According to the tech giant, the new generation technology presents endless possibilities of enhancement and solutions like blockchain can bring in the much-needed efficiency and digital transformation to tackle real-world problems in financial and insurance services industry.

Meanwhile, this is not the first time the Mahindra Groups subsidiary has delved into the potentiality of blockchain technology. Earlier in May, it took upon an anti-spam phone calls project that would relieve mobile phone users of nuisance phone calls by necessitating telecom service providers to comply with regulations laid out by the Telecom Regulatory Authority of India.

In April, it partnered with Samsung to enter the overseas blockchain market through Samsung SDS’s blockchain network platform called Nexledger. Together, they aim to explore customizable use cases of blockchain as per enterprise needs.

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Indian IT Giant Tech Mahindra to Launch Blockchain Finance Management

Tech Mahindra, the IT subsidiary of Indian conglomerate Mahindra Group, partnered with American distributed ledger technology (DLT) firm Adjoint to …

Tech Mahindra, the IT subsidiary of Indian conglomerate Mahindra Group, partnered with American distributed ledger technology (DLT) firm Adjoint to launch a blockchain financial management and insurance solution.

Telecommunications industry news outlet CommsMEA reported on Sept. 2 that the solution is the first of its kind. With this service, clients will reportedly be able to save $4 million for every $1 billion of financial risk management and banking relationships.

Auditable data recording

Per the report, users of the new system will be able to validate the business case with their own data in their own secure environment and help eliminate out-of-order and double data entries.

In order to ease reporting and compliance, auditors can purportedly be given access to an immutable record of all transactions.

The system is based on UpLink, an open source DLT platform aimed at enabling compliant modern financial processes management. The platform has a dedicated messaging protocol and consensus mechanism meant to let participants in the blockchain ecosystem establish what data is put on the distributed ledger.

Previous blockchain initiatives

Earlier this summer, Tech Mahindra announced a blockchain-based anti-spam phone call initiative. The solution allows phone companies to comply with the Telecom Regulatory Authority of India’s regulations to protect mobile phone subscribers from unsolicited calls.

As Cointelegraph reported in April, Samsung SDS has reportedly agreed to cooperate with Tech Mahindra in an attempt to enter the overseas blockchain market.

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Tech Mahindra and Adjoint announce industry’s first blockchain solution for secure enterprise …

… and consensus protocol mechanism which can let participants in the blockchain ecosystem agree on the data to be put in the blockchain ledger.

Adjoint and Tech Mahindra have come together to announce the industry’s first blockchain solution for secure enterprise financial management and insurance services across locations to create a seamless and reliable customer experience.

With these solutions, customers will be able to save USD4 million for every USD1 billion of financial risk management and banking relationships. The solution is based on Uplink, an open source distributed ledge platform designed to improve efficiency, security and compliance in modern financial processes. It comes with a messaging and consensus protocol mechanism which can let participants in the blockchain ecosystem agree on the data to be put in the blockchain ledger.

The Adjoint solution would enable enterprises to validate the business case with their own data in their own secure environment and help in eliminating out-of-order and double data entry. Subsequently, this would create a seamless and reliable user experience backed by data integrity and quality. Auditors can be given access to an immutable record of all transactions, facilitating reporting and compliance as well.

This collaboration is in line with TechMahindra’s TechMNxt charter whose focus is to leverage next generation technologies and solutions like Blockchain. The underlying priority is to enable digital transformation, build and deliver cutting-edge technology solutions and services to address real world problems and meet the customer’s constantly changing needs.

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Tech Mahindra sees digital business growing to 50% of revenue: CP Gurnani

Tech Mahindra CEO CP Gurnani said 5G, blockchain, cyber security, AI and engineering services, will help the company speed up growth over the …
IT services company Tech Mahindra saw a muted first quarter, with tepid revenue growth and narrowing margins. It is now hoping some of its bets in areas including 5G technology and cyber security will pay off.

Tech Mahindra CEO CP Gurnani said 5G, blockchain, cyber security, AI and engineering services, will help the company speed up growth over the next few quarters. “At this stage, these are key priority areas,” he told ET in an interview.

You didn’t have a very good last quarter. What is impacting the business environment? What are the challenges and opportunities?

As far as Brexit (Britain’s exit from the European Union) is concerned, there is bound to be an impact…the point is whether and how much it will be counter-balanced by the rest of Europe. The assumption is that consumption will continue to hold up. There could very well be opportunities in the new regional paradigm.

I think the three major factors today are – the debate around globalisation and de-globalisation, and the overall geo-politics playing out; second, the need for right skills, and finally, fluctuating currency. In all of these, there is an opportunity for everyone and it depends on how you approach it – each company will have its own strategy.

How much do you see digital businesses contributing?

Digital continues to be our constant focus area, contributing 36% of the total revenue currently. Our aim is to take it all the way up to 50% of the overall revenue.

What will be Tech Mahindra’s strategy?

Tech Mahindra is bullish on 5G. We are betting on new-age technologies like engineering services, cyber security, blockchain and on processas-a-service.

So far as 5G is concerned, it’s just a question of time. 5G is ultimately a 2020 play — 2019 will be more of a warm-up and that’s why the 5G labs we have set up with our partner network and on our own will play a critical part in our readiness to offer 5G solutions and services as demand ramps up.

Next year is almost upon us. Do you see a multiplier effect of the bets you are taking?

We see a big opportunity in ‘5G for enterprise’ — we are doing road shows in Europe and the US along with our partners. 5G can unleash new business possibilities and experiences like never before.

5G pilots will continue in 2020, but in my opinion major players in the US, for instance, AT&T, Verizon, T-Mobile and Sprint, would have rolled out 5G in phases, if not completely.

What exactly is Tech Mahindra delivering in 5G?

All businesses are around network services sharing. There are two approaches to it — one is the traditional hardware, which is what some players (like Huawei, Ericsson) have opted for. Our focus is on a softwaredefined networks approach along with our partners.

For us the three clear business imperatives are — ‘5G for enterprise’, which means we work with the local telecom providers and develop a 5G-powered smart factory or smart healthcare or a smart city.

The second part is ‘5G for telcos’ wherein we are enabling telecom providers to roll out 5G, which is where the traditional network services also come in. The other important part is to be more of a system integrator for portions of that network. Tech Mahindra will have an anchor role to play in all three.

With 5G, will the contribution from telecom business go up?

For us ‘5G for enterprise’ and ‘5G for telcos’ are going to be equally important from a business point of view. Ultimately, whether telecom is actually going to become a horizontal or a vertical is an interesting landscape to watch.

I am just saying that the landscape is changing, and it very difficult to come to conclusions just yet.

What about big data, Artificial Intelligence (AI) etc? How will these play out?

You cannot take out AI, Cloud and data from anything that you do. 5G is a physical usage of an application, AI is the oxygen that is required if you want your business to stay alive. Data is the blood flow without which it is impossible to survive. AI and data sciences work in tandem in today’s digital world and are embedded in everything.

So, what I am saying is that new-age technologies are interdependent. People talk about the cloud or Artifical Intelligence (AI), 5G and Blockchain, which are necessities now. The amount of data that 5G will produce will have to be understood, analysed and put to use. Also, cyber security and blockchain will be critical. AI is now becoming mainstream.

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