Somewhat true but they are specialists here and being a specialist helps in winning tenders. Telecom sure is a slow sector but it is a steady one too, with long runaway. In fact I find it better to use Tech Mahindra as a proxy to play telecom theme than invest in a telecom only players like Bharti or Vodafone-idea which are saddled with debt issues and in a highly competitive field.
No wonder Tech Mahindra’s profits are somewhat lumpy but its good dividend yield somewhat makes up for it.
Regardless, the digital offerings of Tech Mahindra seem to have gathered steam (organically & also through acquisitions) and is currently around 35% of revenues. So, with higher growth in this vertical the telecom dependence will only reduce going forward.
Another interesting focus area of Tech Mahindra with wide promise is cybersecurity. With more companies going digital the importance of cybersecurity is only increasing day by day.
Lastly, with Government’s plan on putting a ‘ban’ on Chinese 5G equipments, the prospects of Indian 5G players look brighter. With Tech Mahindra having proven capability in this segment it is very likely that they will become the partner of choice for software implementation. The partnership of ITI with Tech Mahindra is only a testament to that thesis. How well this will pan out is anybody’s guess, though.
Disclosure: I am a tech savvy person but not too conversant with the lingo’s used in IT companies AR. So, I invest in IT companies mainly through Franklin Technology Fund. However, currently evaluating Tech Mahindra as a direct investment candidate. I have high regards for the Mahindra Group & trust its corporate governance. Feel free to correct me if I have gone wrong in my above assessments.