Tech Mahindra Ltd. drew mixed reactions from brokerages after reporting its June-quarter earnings, with Jefferies, Citi and Morgan Stanley raising their price targets while retaining cautious recommendations on the stock.
The brokerage reviews followed the IT services company's June-quarter results, where consolidated net profit missed analysts' estimates even as revenue, operating profit and margins met or exceeded expectations.
Tech Mahindra reported a consolidated net profit of Rs 1,465 crore for the quarter ended June 30, below the Bloomberg consensus estimate of Rs 1,607 crore. Net profit increased 8.2% from Rs 1,354 crore in the March quarter.
Tech Mahindra Q1 Results (Consolidated, YoY)
- Net profit up 8.2% to Rs 1,465 crore from Rs 1,354 crore (Bloomberg estimate: Rs 1,607 crore)
- Revenue up 4.2% to Rs 15,712 crore from Rs 15,076 crore (Estimate: Rs 15,422 crore)
- Ebit up 9.2% to Rs 2,264 crore from Rs 2,073 crore (Estimate: Rs 2,168 crore)
- Margin up 70 basis points to 14.4% from 13.7% (Estimate: 14.1%)
ALSO READ: Tech Mahindra To Roll Out Salary Hikes From Q2 In Phased Manner
Here's what brokerages said after Tech Mahindra Q1 results announcements
Jefferies
- Maintain Underperform; Hike TP to Rs 1,260 from Rs 1,225
- Strong quarter
- Revenue and margin beat; profit in line
- Growth led by manufacturing and BFSI
- Healthy deal wins
- Valuation limits upside
ALSO READ: Wipro Sees Companies Running Into An Unexpected AI Problem. And It's Not Jobs Or Data Storage
Citi
- Maintain Sell; Hike TP to Rs 1,345 from Rs 1,220
- Good Q1 partly aided by one-offs and lower SG&A
- Trades at 20-40% premium to peers
- Industry remains challenging
Morgan Stanley
- Maintain Underweight; Hike TP to Rs 1,270 from Rs 1,160
- Strong revenue beat and robust deal wins
- Management sees sustained momentum in Q2
- EBIT margin guidance reiterated
- Risk of de-rating as margins normalise
ALSO READ: Indian IT Firms Ramp Up AI Hiring By 16% Even As Overall Tech Jobs Shrink
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