Motilal Oswal Reiterates Buy Call on Tech Mahindra, Targets Rs 1750

Tech Mahindra Posts Strong Q4 Earnings, Reiterates Buy Rating

Tech Mahindra, a leading information technology service provider, has reported its fourth quarter fiscal year 2026 (4QFY26) earnings, which have been in line with the expectations of Motilal Oswal's research team. The company's revenue for the quarter stood at USD1.6 billion, representing a quarterly on-quarter (QoQ) growth of 0.6% in constant currency (CC).

Breaking down the revenue performance, the BFSI (Banks, Financial Institutions, and Insurance) segment saw a significant growth of 8.0% QoQ, while the Technology segment recorded a rise of 2.5% QoQ. On the other hand, the Retail segment declined by 5.3% QoQ in USD terms. The company's earnings before interest and tax (EBIT) margin witnessed a substantial increase of 70 basis points (bp) QoQ to 13.8%, surpassing the research team's estimate of 13.6%.

The adjusted profit after tax (Adj. PAT) for the quarter stood at INR14 billion, representing a QoQ growth of 2.2% and a year-over-year (YoY) growth of 16%. However, this figure fell short of the research team's estimate of INR15 billion. The net new deal (NN) deal value of USD1,073 million declined by 2.1% QoQ but recorded a notable increase of 34.5% YoY.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Outlook and Recommendations

Despite the mixed performance in certain segments, Motilal Oswal's research team remains optimistic about Tech Mahindra's turnaround story. The team values the company at 20 times its estimated earnings per share (EPS) for fiscal year 2028 (FY28E) and recommends a target price of INR1,750, which represents a 20% upside from the current market price. Consequently, the research team reiterates its buy rating on the stock.