Tech Mahindra Q2 Review: Steady Growth But Analysts Have A Mixed View — Here's Why

Jefferies

• Maintains 'underperform' with price target of Rs 1,270.

• Rising risks to earnings.

• The company does not see a sharp growth recovery in FY27.

• Slow growth, potential onsite wage inflation in FY27 due to H1B

• The target of 15% margins in FY27 looks optimistic.

• Deal wins need to improve to more than $1 billion meaningful improvement in growth trajectory.

• Better than FY26 may be lower than pre-Covid average levels.

• Expect TechM to deliver 3.5% CAGR in co revenues over FY27-28.

• Expect margins to reach 13.2% by FY27.

BofA

• Reiterates 'Underperform' with price target of Rs 1,185.

• Good deal wins; await better translation to revenue growth.

• Forecast flattish revenue trajectory (cc) in FY26 and acceleration to 3% yoy next year.

• Margin expansion on SG&A reduction.

• Reiterates FY26 margin estimate of 12.2% & FY27 margin forecast of 12.7%.

CLSA

• Reiterates 'High Conviction Outperform' with reduced price target to Rs 1,695, from Rs 1,743 earlier.

• Growth is yet to materially pick up compared to peers.

• Ambiguity is around the company's ambition to grow higher than the peer average in FY27.

• Ebit margins expanded strongly, helped partly by FX.

• Telecom the only major vertical that had sequential softness.

• Lowering EPS estimates due to lower other income.

Nomura

• Maintain 'Buy' and hiked price target to Rs 1,670, from Rs 1,660 earlier.

• Good progress at the midpoint of a three-year turnaround journey.

• Second quarter had good show on most parameters.

• Deal wins at $3.2bn up 57% y-o-y. TechM noted that its pipeline remains strong.

• Expects FY27 to be better than FY26 from a revenue growth perspective.

• Reaffirmed its ambition to post a higher-than-peers revenue growth rate in FY27.

UBS

• Maintain 'Sell' with a price target of Rs 1,500.

• Largely in-line performance.

• Growth largely driven by the retail segment (+9% QoQ).

• The company did indicate that FY27 growth would be more muted than initial expectations.

• Believe the FY27 guidance is at risk.

Motilal Oswal

• Reiterate 'Buy' on with a price target of Rs 1,900.

• Disciplined execution gets it closer to FY27 targets.

• The largest client is growing and expects telecom to turn up in 2H.

• Margin expansion should extend beyond FY27.

• Focusing on larger accounts and efficiency programs is helping margins.

• Ongoing restructuring under the new leadership is tracking well.