Tech Mahindra Q2 Review: Steady Growth But Analysts Have A Mixed View — Here's Why
Out of the 46 analysts tracking Tech Mahindra, 23 have a 'buy' rating on the stock.
Tech Mahindra Ltd. has received mixed reviews from brokerages after second-quarter earnings showed steady earnings growth, even as the future outlook remains clouded.
Out of the 46 analysts tracking Tech Mahindra, 23 have a 'buy' rating on the stock, 10 recommend a 'hold', and 13 suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets is Rs 1,586, which implies a potential upside of 8%.
InCred Securities has the highest price target at Rs 1,908, followed by YES Research (Rs 1,905), Motilal Oswal (Rs 1,900) and IDBI Capital Markets (Rs 1,850).
The stock has fallen 12% in the last 12 months and 14% on a year-to-date basis.
Brokerages On Tech Mahindra Q2
Jefferies
Maintains 'underperform' with price target of Rs 1,270.
Rising risks to earnings.
The company does not see a sharp growth recovery in FY27.
Slow growth, potential onsite wage inflation in FY27 due to H1B
The target of 15% margins in FY27 looks optimistic.
Deal wins need to improve to more than $1 billion meaningful improvement in growth trajectory.
Better than FY26 may be lower than pre-Covid average levels.
Expect TechM to deliver 3.5% CAGR in co revenues over FY27-28.
Expect margins to reach 13.2% by FY27.
BofA
Reiterates 'Underperform' with price target of Rs 1,185.
Good deal wins; await better translation to revenue growth.
Forecast flattish revenue trajectory (cc) in FY26 and acceleration to 3% yoy next year.
Margin expansion on SG&A reduction.
Reiterates FY26 margin estimate of 12.2% & FY27 margin forecast of 12.7%.
CLSA
Reiterates 'High Conviction Outperform' with reduced price target to Rs 1,695, from Rs 1,743 earlier.
Growth is yet to materially pick up compared to peers.
Ambiguity is around the company's ambition to grow higher than the peer average in FY27.
Ebit margins expanded strongly, helped partly by FX.
Telecom the only major vertical that had sequential softness.
Lowering EPS estimates due to lower other income.
Nomura
Maintain 'Buy' and hiked price target to Rs 1,670, from Rs 1,660 earlier.
Good progress at the midpoint of a three-year turnaround journey.
Second quarter had good show on most parameters.
Deal wins at $3.2bn up 57% y-o-y. TechM noted that its pipeline remains strong.
Expects FY27 to be better than FY26 from a revenue growth perspective.
Reaffirmed its ambition to post a higher-than-peers revenue growth rate in FY27.
UBS
Maintain 'Sell' with a price target of Rs 1,500.
Largely in-line performance.
Growth largely driven by the retail segment (+9% QoQ).
The company did indicate that FY27 growth would be more muted than initial expectations.
Believe the FY27 guidance is at risk.
Motilal Oswal
Reiterate 'Buy' on with a price target of Rs 1,900.
Disciplined execution gets it closer to FY27 targets.
The largest client is growing and expects telecom to turn up in 2H.
Margin expansion should extend beyond FY27.
Focusing on larger accounts and efficiency programs is helping margins.
Ongoing restructuring under the new leadership is tracking well.
