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Morgan Stanley resumes Tech Mahindra coverage; says stock undervalued

An employee sits at the front desk inside Tech Mahindra office building in Noida on the outskirts of New Delhi March 18, 2013. REUTERS/Adnan Abidi/Files

Reuters Market Eye - Morgan Stanley resumes coverage of Tech Mahindra Ltd (NSI:TECHM.NS - News) at "overweight" and a target price of 1,650 rupees, saying shares remain undervalued and a re-rating can continue.

The bank says it believes the company's revenue growth over the next 2-3 years could surpass its and consensus expectations.

It highlights margin surprise, acquisition of treasury shares, acquiring other Mahindra group IT companies and higher dividend payout as key to further re-rating.

Tech Mahindra shares up 4.2 percent at 0437 GMT.