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IDBI Capital Report
Tech Mahindra Ltd.'s shares are likely to remain in focus after IDBI Capital maintained a bullish stance on the IT major, revising its target price to Rs 1,697 following the company's Q4 FY26 results.
The brokerage has reiterated its ‘Buy' rating, indicating a potential upside of around 16% from the current market price of Rs 1,463.
Key Highlights and Investment Rationale
Tech Mahindra reported a strong Q4 FY26, marking the successful completion of its "Stabilization Phase" with ninth consecutive quarter of margin improvement.
Quarterly revenue reached $1.6 billion, reflecting a 4.9% YoY increase, while full-year revenue stood at ~$ 6.4 billion. A main highlight was the significant deal activity; new bookings hit a five years high of ~$3.8bn, driven by strategic mega-deals in telecom and aerospace.
Profitability was robust, with Ebit margins expanding to 13.8% in Q4, a significant 330 basis points improvement over the previous year. Full-year net profit grew 7% to $537 million along with a record-high dividend payment of Rs 51/share.
With 80% of its workforce now AI-enabled and exceptional growth in the BFSI vertical (+8.0% QoQ), the company is well positioned for its FY27 growth targets.
Overall, Tech Mahindra's transition toward AI-led, high-value services is delivering clear operational leverage despite a complex global macroeconomic environment.
IDBI Capital believes Tech Mahindra is well-positioned to deliver sustained growth, supported by:
- Strong deal pipeline and execution.
- Continued margin expansion.
- Improving return ratios
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