Tech Mahindra Ltd. share price target

We have upgraded the company to Buy with a revised price target of Rs. 1,715 (raised target multiple to 25xFY26E) to factor probable business recovery on account of a well-defined and articulated roadmap towards FY27, which
is likely to be supported by gradually receding headwinds and leveraging of Mahindra group’s synergies and ecosystems.

Tech Mahindra’s weak Q4FY24 financial performance was accompanied by management's unveiling of a comprehensive three-pronged strategy targeting growth, operations, and organizational restructuring to bolster long-term revenue growth and margins.
Revenue declined by 6.2% YoY to INR 1,28,713, primarily due to Communications, Media and Entertainment vertical (-16.5% YoY).

Tech Mahindra (TechM) has reported slightly better-than-estimated revenue performance with 0.8% QoQ CC decline, led by traction in BFSI vertical in Q4FY24. It reported TCV growth of 31% QoQ with EBIT margin at 7.4%.

Given the uncertainty from the world's largest economies, we expect delays in decision-making on IT budgets. Keeping this in view, we recommend a SELL on the stocks.

For Q3FY24, Tech Mahindra generated revenue of INR 1,31,013 Mn, showcasing a decline of 4.6% YoY and growth of 1.8% QoQ. This growth was led by one-time revenues in retail and the seasonality effect of Comviva.

Recommendation: Given the uncertainty from the world's largest economies, we expect delays in decision-making on IT budgets. Keeping this in view, we recommend a SELL on the stock.