Tech Mahindra Q4 Review - New CEO Lays Ambitious Plans To Achieve Higher Growth, 15% OPM: Dolat Capital

Dolat Capital Report

Tech Mahindra Ltd.’s constant currency revenue declined by 0.8% in CC versus (our estimate: -1% CC) as enterprise/comms segment remained muted and declined 1%/2.8% QoQ.

Operating profit margin stood at 7.4%, (our estimate: 7%), up 200 bps QoQ due to absence of rationalization impact.

Management laid very ambitious plan to achieve growth rate higher to peerset (implies 7%+) and Ebit margins of 15%. While we appreciate the deepdive on its three-year roadmap, we would have rather preferred their near-term outlook given uncertainty in the environment and daunting task at hand.

We tweak our FY25/FY26E earnings per share estimate (-5%/-7%) given weak deal wins and slowing revenue conversion.

FY27E guidance is expected to be a tall task, yet overstretched. Maintain ‘Sell’ rating with target price of Rs 1,190 valuing at 20 times FY26E.

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