Motilal Oswal remains positive about the restructuring at Tech Mahindra under the new leadership. But expects the impact from these steps to be visible gradually. With the continued strength in BFSI and improving operational efficiency, sees room for continued margin improvement ahead.
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Motilal Oswal Report
Tech Mahindra Ltd. reported Q2 FY26 revenue of $1.6 billion, up 1.6% QoQ in constant currency vs our estimate of 1.0% CC growth. Retail/Manufacturing/BFSI grew 9.0%/5.3%/3.8% QoQ, whereas communications/others fell 2.0%/8.8% QoQ (in USD terms).
Ebit margin was up 100bp QoQ at 12.1%, beating our estimate of 11.6%. PAT stood at Rs 11.9 billion (up 4.7% QoQ/down 4.4% YoY), below our estimate of Rs 13 billion.
In INR terms, revenue/Ebit/PAT grew 4.0%/33.3%/11.1% in H1 FY26 YoY. In H2 FY26, we expect revenue/Ebit/PAT to grow by 8.3%/34.7%/39.0% YoY.
We reiterate Buy on Tech Mahindra with a target price of Rs 1,900 (implying 29% upside), based on 23x Jun'27E EPS.
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