- Tech Mahindra's Q1 FY26 revenue fell slightly to Rs 13,351.2 crore, below estimates
- EBIT rose 7% quarter-on-quarter to Rs 1,477.1 crore, with margin improving to 11.1%
- Net profit declined 2% to Rs 1,140.6 crore, missing the estimated Rs 1,198 crore
Tech Mahindra Ltd.'s stock declined more than 2% following its first-quarter results for FY26, as investors reacted to a mixed performance. Despite some operational improvements, the broader sentiment remained cautious, with major brokerages maintaining their 'Underperform' ratings on the stock.
In the June quarter, Tech Mahindra reported a marginal dip in revenue, which came in at Rs 13,351.2 crore, slightly below Bloomberg's estimate of Rs 13,422 crore.
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On a sequential basis, this marked a 0.2% decline from Rs 13,384 crore in the previous quarter. However, the company managed to improve its operating performance, with EBIT rising 7% quarter-on-quarter to Rs 1,477.1 crore, closely aligning with expectations. The EBIT margin expanded by 80 basis points to 11.1%, reflecting better cost management and operational efficiency. Net profit, however, fell 2% to Rs 1,140.6 crore, missing the estimated Rs 1,198 crore.
Brokerages responded to the results with a cautious tone, highlighting both the positives and the lingering concerns. Morgan Stanley acknowledged the company's margin delivery and noted strong deal wins and stability among top clients as encouraging signs. However, it maintained its 'Underperform' rating and trimmed the target price to Rs 1,555 from Rs 1,575, citing limited upside potential.
Macquarie also retained its 'Underperform' stance, slightly raising its target price to Rs 1,110 from Rs 1,090. The brokerage pointed out that the EBIT margin was in line with expectations, excluding a one-time gain of 18 basis points. Meanwhile, Jefferies echoed similar concerns, maintaining its 'Underperform' rating while reducing the target price to Rs 1,400 from Rs 1,430. It flagged the revenue miss and noted that despite strong deal wins, revenue growth remains under pressure.
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