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HDFC Securities Institutional Equities
Tech Mahindra Ltd. shares are likely to be in focus after HDFC Securities maintained its ‘Add' rating on the stock, citing improving growth visibility, strong deal wins, and continued margin expansion, even as it trimmed earnings estimates.
The brokerage has set a target price of Rs 1,500, implying moderate upside from current levels.
HDFC Securities noted that Tech Mahindra closed FY26 with revenue of $6.38 billion, supported by record deal wins of $3.79 billion TCV, up 42% YoY, signaling a strong demand pipeline. The company also reported its 10th consecutive quarter of Ebit margin expansion, reaching 13.8%, reflecting steady operational improvement.
The growth ramp is anchored by a strong deal pipeline and recent mega-deal wins — including the global partnership with Orange Business — which are expected to scale up through FY27E. While industry-wide growth is pegged at 2-4%, Tech Mahindra expects to outperform, supported by manufacturing momentum (+11.8% YoY in Q4), steady BFSI and retail verticals, and a revival in telecom (its largest vertical), led by recent deal wins.
Achievement of the FY27E targets hinges on the scheduled ramp-up of already-signed large deals, conversion of the BFSI/manufacturing pipeline into bookings, and execution discipline amid a still-uncertain macro backdrop.
On margins, the playbook shifts from the cost-efficiency-led gains that drove the FY26 trajectory to a higher mix of fixed-price contracts, AI-led delivery, and scaling of human-plus-agent pricing models in FY27E.
Valuation and Risks
Despite the positive outlook, the brokerage noted that the stock trades at a premium valuation (~19x FY27E P/E) compared to peers, which may cap upside in the near term.
Key risks include:
Delays in large deal ramp-ups
Weakness in hi-tech and healthcare verticals
Macro uncertainties such as tariffs and geopolitical factors.
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