Tech Mahindra Q2 Review — Systematix Maintains 'Sell' On The Stock; Says Current Valuations Limits Upside

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Systematix Report

Tech Mahindra Ltd. trades at 24.8x 1-year forward P/E, which is at a 26% premium to its average last 10-year historical valuation.

Valuations remain elevated even after the recent improvement in execution. We raise our target multiple to 17x FY27E EPS (from 15 times earlier) to reflect the sustained margin expansion, arriving at a revised target price of Rs 1,251 (vs Rs 1,112 earlier).

We maintain our Sell rating, as the current valuations limit further upside. Recovery in revenue growth and TCV numbers, company’s reversal to growth trajectory and meaningful improvement in Ebit margin are key upside risks to our call and estimates.

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