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IDBI Capital Report
Tech Mahindra Ltd. reported subdued revenue growth in Q2 FY24 (down 2.9% QoQ) due to rationalisation of low margin contracts, portfolio run off, reconstituting contracts in top client (removing pass through) and transition in one of the top client.
Going forward, we expect Tech Mahindra to report ~6% YoY decline in FY24E revenues due to continued rationalisation and project run offs. This coupled poor margin performance in H1 prompt us to revise our earnings per share estimates downwards by 44% for FY24E and 19% for FY25E.
Despite this considering the credential of new Chief Executive Officer and expectation of turnaround has prompted us to maintain 'Hold' rating on the stock with a revised target price of Rs 1,090 (18 times FY25E earnings per share).
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