Tech Mahindra Q2 Review— Dolat Capital Revises Rating To 'Reduce' On Muted Growth Visibility; Sees 6% Downside

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Dolat Capital Report

Tech Mahindra Ltd.’s Q2 revenue grew 1.6% in constant currency terms (our estimate: 0.8%), led by healthy execution in manufacturing (+5.2% QoQ), retail/transport (+7%) BFSI (+6%).

Operating profit margin saw significant uptick, expanding by 108bps QoQ to 12.1% (our estimate:11.6%), led by selling general and administrative savings and productivity gains.

Vertical commentary improved for Manufacturing (ex-Auto) and Transport (Logistics), with stability in BFSI. CME faced near-term pressure but remained stable. Management reiterated trust on the 15% OPM path, but growth visibility remains clouded by macro headwinds.

Tech Mahindra’s Q2 FY26 performance saw healthy growth and margin improvement, but sustained improvement needs to be monitored.

We raise earnings estimate by 1.9%/2.8% noting a margin uptick and introduce FY28E estm with EPS of Rs. 77.6.

With the stock correcting ~9% since Q1 results, we revise our rating to ‘Reduce’ with a target price of Rs1,550, valuing the stock at 20x FY28E earnings.

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