Tech Mahindra Shares Decline 2.5% Following Q4 Earnings Release, with Analysts Diverging Over Valuation

Tech Mahindra Stock Falls 2.5 Percent Amid In-Line Q4 Results

Tech Mahindra Ltd's shares declined as much as 2.5 percent in early trade on Thursday, extending yesterday's losses. The company's stock was trading at Rs 1,426, down 2.5 percent in the morning session, following a 2.6 percent decline in the previous day.

The IT major reported a 20.7 percent quarter-on-quarter rise in net profit at Rs 1,353.8 crore. Revenue growth remained steady, with consolidated revenue rising 4.7 percent sequentially to Rs 15,076 crore, ahead of CNBC TV18 poll estimates. Constant currency growth came in at 0.6 percent, broadly in line with expectations.

Operationally, Tech Mahindra delivered a stable performance. Earnings before interest and tax (EBIT) rose 10.2 percent sequentially to Rs 2,084 crore, with margin expanding 70 basis points to 13.8 percent. The company also maintained strong deal momentum, with total deal wins exceeding $1 billion for the quarter, including $1,073 million in new deals, reflecting sustained client spending across key verticals.

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Management highlighted a continued push towards an AI-led operating model, aimed at improving efficiencies and supporting margin expansion over time. Telecom remains a key growth driver, while the company continues to scale multi-year engagements across sectors such as banking, manufacturing, and energy.

HSBC maintained a 'Buy' rating on Tech Mahindra shares, citing a strong quarter and reiterated confidence in the company's ability to achieve its FY27 EBIT margin target of 15 percent. The brokerage expects telecom-led growth, particularly in Europe, and sustained deal wins to drive earnings over the medium to long term.

In contrast, Jefferies retained an 'Underperform' rating with a target price of Rs 1,225. It said that while revenue and margins were in line with expectations, profit was impacted by forex-related losses. The brokerage acknowledged strong deal wins and margin improvement, but flagged that the stock's valuation premium limits further upside.

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Tech Mahindra stock has remained largely flat over the past one year, declining about 0.9 percent, compared with a 0.3 percent fall in the Nifty 50. The company commands a market capitalisation of around Rs 1.4 lakh crore.