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TechM trades higher for 10th straight day; should you buy, hold or sell?
Shares of Tech Mahindra hit an over four-month high of ₹1,724.25, gaining 2 per cent on the BSE in Tuesday's intra-day trade in an otherwise weak market. In comparison, the BSE Sensex was down 0.34 per cent at 81,517 at 01:59 PM.
The stock of the large cap information technology (IT) company was quoting higher for the 10th straight trading day, surging 12 per cent during the period. It has bounced back 43 per cent from its 52-week low of ₹1,209.70 hit on April 7, 2025.
Currently, Tech Mahindra trades at its highest level since January 27, 2025. The stock is seen inching towards its 52-week high of ₹1,807.40, touched on December 12, 2024. Catch Stock Market Updates Today LIVE
Tech Mahindra EBIT margin guidance
Tech Mahindra is focusing on various key levers such as fixed price project optimisation via automation and productivity improvements, optimised employee pyramid, average resource costs and many others, to improve its earnings before interest and tax (EBIT) margins to 15 per cent by FY27 from its current levels of 10.5 per cent.
Tech Mahindra has also launched new growth initiatives including: Tech Mahindra Consulting (dedicated consulting arm) & Comprehensive AI Suite (positioning as a Strategic AI Partner to clients, with focus areas including LLM & Agentic AI) on the back of which it treads towards its FY27 goal.
Brokerages view on Tech Mahindra
Management remains committed to improve margins moving forward through operational efficiencies (Project Fortius), automation, AI, and other initiatives, with the goal of achieving their 15 per cent target margins by FY27. However, considering the current pressures from an uncertain macro environment, analysts at ICICI Securities bake in EBIT margins of 12.5 per cent/ 14 per cent in FY26E/ FY27E.
Despite the current macro pressures, the brokerage firm believes with the current investments and efforts towards capability building, Tech Mahindra is on track to achieve its FY27 goals. Analysts maintain BUY rating on Tech Mahindra, valuing it at 24x P/E on FY27E EPS, with target price of ₹1,730 (vs ₹2,000 earlier).
According to Geojit Financial Services, under the new leadership, Tech Mahindra is undergoing a transformation, diversifying its client base and expanding beyond its traditional strongholds in telecom and hi-tech.
With a solid foundation in place and an uptick in deal wins, including a large deal with a US-based Telco firm, it is well-positioned to capitalize on the emerging opportunities in 5G, supported by its timely investments in network infrastructure, intellectual properties, and ecosystem partnerships. Its turnaround strategy appears resilient to economic fluctuations.
With potential upside from a telecom rebound, operational efficiencies and cost optimisation from automation and Project Fortius, the brokerage firm expect improved margin gains going forward. 'Therefore, we upgrade our rating to BUY from HOLD on the stock, with a revised target price of ₹1,790 based on 25x FY27E adjusted EPS,' the brokerage firm said in the Q4FY25 result update.
Tech Mahindra has been on a revival journey with a new CEO focusing on adding quality clients, focused on growth beyond traditional verticals of telecom and hi-tech as well as building synergy with the Mahindra & Mahindra (M&M) Group for further scaling up the business. It is relooking at cost structure to improve margin, early signs of the same are already visible, analysts at Elara Capital said.
The brokerage firm said it is building in back-ended revenue growth for Tech Mahindra like other firms, as it is not immune to turbulence visible in FY26. For FY27, the company aspires to grow above peer average, and analysts believe ingredients are in place. However, the stock is trading above target price of ₹1,530 per share.
About Tech Mahindra
Tech Mahindra offers technology consulting and digital solutions to global enterprises across industries, enabling transformative scale at unparalleled speed. With 150,000+ professionals across 90+ countries helping 1100+ clients, Tech Mahindra provides a full spectrum of services including consulting, information technology, enterprise applications, business process services, engineering services, network services, customer experience & design, AI & analytics, and cloud & infrastructure services.
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