Tech Mahindra Q3 Results Review — Mixed Quarter With Promising Execution, Deals; Nirmal Bang Maintains 'Hold'

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Nirmal Bang Report

Tech Mahindra Ltd.'s Q3 results demonstrated continued progress in the company's transformation journey, initiated under CEO Mohit Joshi's leadership. However, the pace of revenue growth remains moderate. While margin expansion is encouraging, sustained growth acceleration, particularly in the telecom vertical, is crucial for a more positive outlook.

The company's focus on acquiring high-quality clients, its aggressive GenAI strategy, and its commitment to operational efficiency through Project Fortius are positive factors. Led by slow pace in revenue growth, we trim our FY26/27 revenue growth estimates by 2.4%/2.2% respectively; however increase our FY26/27 margin estimates by 20/50bps on their promising execution.

This led to marginal impact on EPS estimates of FY26/27 of -1%/+0.8% respectively. Though we like the turnaround story of Tech Mahindra and promising execution, we reiterate Hold, pending further evidence of this acceleration and the successful execution of the company's strategic initiatives. Target price of Rs 1,851 (versus Rs 1,749 earlier) at an unchanged target multiple of 24 times.

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