Tech Mahindra Q2 Review — Margin Beat; FY27 May Be Slower Than Expected Says Yes Securities Maintaining 'Buy'

Tech Mahindra delivered better-than-expected revenue growth, beating consensus by 2.2%, led by strong traction in Europe, steady progress in BFSI, and large deal ramp-ups in Retail, despite ongoing macro headwinds. Management, however, remained cautious on a meaningful acceleration in revenue growth for both FY27 and the broader industry, citing continued macroeconomic and policy uncertainties.

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Yes Securities Report

We remain constructive on Tech Mahindra Ltd.'s margin recovery potential, forecasting Ebit margins of 13.4% for FY27 (vs consensus at 14%), despite the prevailing weak demand environment.

Multiple margin levers remain in place to support improvement ahead. While the company's order book stands at a three-year high, indicating a healthy medium-term pipeline, revenue conversion may be weak given weak macro environment.

Therefore, we lower our FY27 CC revenue growth estimate to 5.2% (from ~6%), and forecast Q3 FY27–Q2 FY28 EPS at Rs 71.3.

Retaining our target multiple of 25x, we arrive at a revised target price of Rs 1,782 (from Rs 1,905 earlier), implying a 21.3% upside.

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