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Mint
7 days ago
- Business
- Mint
Tech Mahindra: What can upset its apple cart
The Tech Mahindra Ltd stock is up 17% in the past year, beating sector index Nifty IT's 7% returns. The optimism stems from the company's ongoing efforts to revive its financial performance, which has lagged tier-1 peers due to a different vertical mix. Tech Mahindra has significant exposure to the communications vertical, which remains under stress. For competitors, a large part of their revenue comes from the relatively better placed banking, financial services and insurance sector. Going by Tech Mahindra's latest management commentary, it is on track to achieve four key objectives by FY27. These are: revenue growth above peer average, an Ebit (earnings before interest and tax) margin of 15%, return on capital employed of over 30%, and return of more than 85% of free cash flow to shareholders. True, the FY25 results indicate that Tech Mahindra is making gradual progress on select earnings a weak global economic backdrop could further hamper discretionary IT demand, putting the management's confidence to test. Tech Mahindra reported strong order wins with a total contract value of $2.7 billion, up 42.5% year-on-year. Deal wins were broad-based across key industries and markets, helping the company to diversify its portfolio. Tech Mahindra expects deal wins to be in a $600-800 million range per quarter. 'Despite strict governance on deals and programmes to get pricing increases, deal win velocity has increased. We believe that a successful turnaround is on the cards, leading to re-rating of multiples and an increase in Street earnings per share estimates," Kotak Institutional Equities said in a report dated 12 June. Tech Mahindra has revamped its sales team and go-to-market strategy, aiming to expand the deal pipeline and improve win rates. The company has adopted a selective approach to ensure margin-accretive deals. Margin improvement Its Ebit margin expanded by 360 basis points to 9.7% in FY25. This was driven by operational efficiencies, savings from Project Fortius (a plan to achieve a 15% operating margin), and the discontinuation of low-margin business. In the March quarter (Q4 of FY25), the Ebit margin improved for the sixth quarter in a row to 10.5%, ahead of consensus estimates. The management expects further margin improvement in FY26 with the help of the integration of portfolio companies, leading to a reduction in operational costs and increased utilisation. On the other hand, revenue growth has been modest. In FY25, Tech Mahindra achieved year-on-year revenue growth of 0.3%. In Q4, constant currency revenue fell 1.5% sequentially, impacted by project delays with a hi-tech client, amid macroeconomic uncertainty. On the Q4 earnings call, the management said although projects have not been cancelled, there have been deferrals and delays in decision-making. According to a recent Citi report, the macro environment is getting tougher – while it is difficult to quantify the impact, the downside risks have increased and are likely to weigh on multiples. 'Revenue trajectory has seen some impact given the macro uncertainty and impact on discretionary spends; particularly, in verticals like autos and hi-tech," it said. The global research house has a sell rating on the Tech Mahindra stock and warns of impact on Q1FY26 earnings from seasonality in Comviva, its digital solutions subsidiary. Additionally, valuations are above historical levels. At FY27 price-to-earnings, the Tech Mahindra stock is trading at 22x, showed Bloomberg data. This is higher than the 10-year average of 21x and almost in-line with larger peers Tata Consultancy Services Ltd and Infosys Ltd. Tech Mahindra is making the right moves that have helped it bridge the valuation gap with its peers. However, given the elevated macroeconomic uncertainty, the pace of execution is critical. Any miss on that front could mean a longer recovery path than the management's guidance.
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Business Standard
17-06-2025
- Business
- Business Standard
TechM trades higher for 10th straight day; should you buy, hold or sell?
Share price of Tech Mahindra today 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.
Economic Times
24-04-2025
- Business
- Economic Times
Tech Mahindra Q4 Results Live: Profit jumps 76% YoY to Rs 1,167 crore; Rs 30 per share dividend declared
24 Apr 2025 | 06:06:02 PM IST Tech Mahindra Q4 Results Live: IT services company Tech Mahindra posted 76% YoY growth in its consolidated net profit at Rs 1,167 crore in the fourth quarter, while revenue from operations increased 4% year-on-year (YoY) to Rs 13,384 crore. Tech Mahindra Q4 Results Live: Nuvama forecast a -0.7% QoQ decline in constant currency and a -1.5% QoQ drop in USD revenue company's Board has also recommended a final dividend of Rs 30 per share for the financial year ended March 2025. "We delivered operational excellence by achieving a 60% increase in operating profit through strong execution, operational leverage, and cost management. We raised our dividend per share by 12.5% and returned 85% of our free cash flow to shareholders, reflecting our commitment to capital allocation policy," said Rohit Anand, CTO, Tech Mahindra. Total headcount at the end of FY25 stood at 148,731, down 1,757 employees when compared with the preceding December quarter. LTM IT attrition came in at 11.8%. The company secured deal wins of $2.7 billion, reflecting a 42% YoY increase. "This is a clear validation of the depth of our client partnerships," Tech Mahindra said. - Mohit Joshi, CEO and MD, Tech Mahindra In constant currency (CC) terms, revenue grew 0.3% YoY, but fell 1.5% QoQ. The dollar revenue for the company stood at $1.5 billion, which was flat YoY. On a sequential basis, profit surged 19% and revenues rose by a marginal 1%. The company's Board has also recommended a final dividend of Rs 30 per share for the financial year ended March 2025. IT services company Tech Mahindra posted 76% YoY growth in its consolidated net profit at Rs 1,167 crore in the fourth quarter, while revenue from operations increased 4% year-on-year (YoY) to Rs 13,384 crore. Tech Mahindra Results: We anticipate a -0.4% QoQ constant currency (CC) revenue decline, as benefits from seasonal strength in Comviva and the end of furloughs are likely to be countered by challenges in BPS services for a key Hitech client and the streamlining of a few low-margin Healthcare projects. Additionally, decision-making has slowed due to recent policy shifts and tariff changes in the margin is expected to remain flat quarter-on-quarter, with the impact of wage hikes being balanced out by cost efficiencies from Project Fortius. Net Profit Growth: 93% YoY increase in consolidated net profit, reaching Rs 983 crore, compared to Rs 510 crore in the same quarter last year. 93% YoY increase in consolidated net profit, reaching Rs 983 crore, compared to Rs 510 crore in the same quarter last year. Revenue from Operations: Rs 13,286 crore, a 1.4% increase YoY (Rs 13,101 crore in Q3FY24). Rs 13,286 crore, a 1.4% increase YoY (Rs 13,101 crore in Q3FY24). Revenue in Dollar Terms : $1,567 million, down 0.4% YoY and a 1.3% decline QoQ. : $1,567 million, down 0.4% YoY and a 1.3% decline QoQ. EBITDA: Rs 1,809 crore, reflecting a 3.4% QoQ growth and a 57.8% YoY increase. Tech Mahindra Results: Investors will closely watch management commentary on: Client budgets for CY25 Progress in BFSI sector account penetration Deal pipeline strength and conversion into Total Contract Value (TCV) Restructuring updates of subsidiaries Rationalization of tail accounts Impact of GenAI on the BPO segment Nuvama estimates -0.7% QoQ decline in constant currency (CC) terms. USD revenue seen down -1.5% QoQ. Tech Mahindra Q4 Results: Gains from reversal of furloughs and Comviva seasonality to be partially offset by: Headwinds in the hi-tech sector Closure of low-margin deals Price as on 02.43.23 PM , Click on company names for their live prices. Tech Mahindra Results: Analysts expect $750 million in net new deal wins. Represents a QoQ improvement and strong YoY growth New deals likely secured at higher margins Tech Mahindra Results: Revenue is expected to grow 4% YoY. Tech Mahindra Results: Net profit is projected to rise 65% YoY for the January–March quarter, based on the average of six brokerage estimates. Tech Mahindra Results: The company is expected to benefit from the reversal of furloughs and seasonality in Comviva, though these gains may be offset by challenges in the hi-tech sector and some low-margin deal closures. Net profit for the January-March period is projected to rise by 65% year-on-year (YoY), according to the average estimate of six brokerages, while revenue is expected to increase by 4% YoY. Read More
Mint
24-04-2025
- Business
- Mint
Tech Mahindra share price climbs 2% ahead of Q4 results today; here's what experts expect from IT firm's Q4 earnings
Tech Mahindra share price traded with decent gains in the morning session of trade on Thursday, April 24, in an otherwise weak market. Tech Mahindra share price opened at ₹ 1,450.45 against its previous close of ₹ 1,439.30 and climbed 1.9 per cent to an intraday high of ₹ 1466.05. Around 10 AM, Tech Mahindra share price traded 0.90 per cent higher at ₹ 1,452.10. Equity benchmark Sensex was 0.22 per cent down at 79,938 at that time. After declining for four straight months, Tech Mahindra's share price has rebounded in April, rising nearly 2 per cent so far this month. Year-to-date, the stock is down nearly 16 per cent. The IT stock hit a 52-week low of ₹ 1,172.55 on April 25 and a 52-week high of ₹ 1,807.40 on December 12 last year. Tech Mahindra will declare its March quarter (Q4FY25) results today (Thursday, 24th April, 2025). Along with the Q4 earnings, the IT company may also announce an interim dividend for the last financial year (FY25). Tech Mahindra's Q4 numbers could come mixed, with mild growth in profit and margins. Along with the key numbers, investors focus will be on management commentary for the outlook on key segments, especially in the US, such as CME (communications, media and entertainment) and manufacturing verticals. According to brokerage firm Motilal Oswal Financial Services, Tech Mahindra's revenue growth may decline 0.8 per cent quarter-on-quarter (QoQ) in constant currency (CC) in Q4 due to a muted recovery in the telecom and manufacturing segments, which contribute nearly 50 per cent of the company's total revenue. "While the communications vertical has stabilised, recovery may take time," Motilal Oswal said. Motilal said Tech Mahindra's adjusted profit after tax (PAT) may rise 3.3 per cent year-on-year (YoY) and 1.8 per cent QoQ. Margins may rise 10bp despite wage hikes as 'Project Fortius' continues to deliver. Last year, Tech Mahindra unveiled its three-year plan, Project Fortius, to achieve a 15 per cent operating margin. Motilal expects Tech Mahindra to deliver a good deal of TCV (total contract value) in Q4, highlighting that the rate of deal wins saw improvement in the third quarter in key verticals such as telecom and hi-tech. On the other hand, Nuvama Institutional Equities expects Tech Mahindra to report a 0.7 per cent QoQ decline in revenue in constant currency (CC) terms and a 1.5 per cent QoQ decline in US dollar (USD) terms. Nuvama believes the benefits of reversal of furloughs and Comviva seasonality will be offset by headwinds in hi-tech and a few low-margin deal closures. Tech Mahindra's margins, according to Nuvama, may remain flat Qoq, despite the wage hike. "We shall watch out for the management comments on the FY27 revenue and margin guidance, and their progress on it," Nuvama said. Read all market-related news here Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary. First Published: 24 Apr 2025, 09:58 AM IST
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Business Standard
23-04-2025
- Business
- Business Standard
Tech Mahindra Q4 results: check date, time, expectations, dividend
Tech Mahindra Q4 Results 2025: The IT major is likely to report a flat revenue growth, while the bottom line is expected to rise by 10 per cent Sai Aravindh Mumbai Tech Mahindra Q4 results preview: Information Technology major Tech Mahindra is expected to report flat sequential growth in both revenue and margins, while analysts tracked by Business Standard project a 10 per cent quarter-on-qyarter (Q-o-Q) rise in net profit for the fourth quarter of the financial year. The IT bellwether will report its earnings for the fourth quarter ended March on April 24, Thursday, following muted sequential growth and cautious commentary from peers Infosys, Wipro, and HCL Technologies amid ongoing global trade concerns. Tech Mahindra revenue is expected to come in at ₹13,457.85 crore, marking a 1.3 per cent increase Q-o-Q, according to consensus estimates of analysts tracked by Business Standard. On a year-on-year (Y-o-Y) basis, the company's top line is projected to grow by an average of 4.5 per cent. Revenue for the IT giant will be weighed by seasonal weakness in the Business Process Outsourcing (BPO) business, while the margins will improve from the benefits of project Fortius, according to analysts. Brokerages expect earnings before interest and tax (Ebit) margin to expand by 9 basis points (bps) to 10.29 per cent. The firm is expected to post a 10.2 per cent decline in net profit for the fourth quarter sequentially to ₹1,083.71 crore. On a Y-o-Y basis, the net profit is expected to grow at an average of 11.76 per cent. Here's how analysts of various brokerages expect Tech Mahindra to fare in Q4: Kotak Securities: The brokerage expects Tech Mahindra to report a constant currency revenue decline in Q4, driven by weakness in the hi-tech segment and seasonal softness in the BPO business. These headwinds are expected to outweigh the seasonal boost from Comviva. However, Ebit margin is likely to improve by 30 bps, aided by cost efficiencies from Project Fortius and the benefit of rupee depreciation, offsetting the impact of wage hikes. Net new deal wins are expected at around $750 million, showing both quarter-on-quarter and year-on-year improvement. Importantly, these deals are coming in at higher margins, Kotak said. For FY26, Kotak expects solid profitability, though revenue growth may remain muted due to the exit from low-margin businesses. The net profit is likely to rise by 1.2 per cent Q-o-Q to ₹994.8 crore, while the Ebit are expected to rise by 31 basis points sequentially, according to Kotak. IDBI Capital: Analysts at the brokerage expect Tech Mahindra's revenue to decline by 0.6 per cent in US dollar terms, mainly due to weakness in the hi-tech vertical. Ebit margin is likely to stay flat, supported by cost benefits from Project Fortius, which helps offset revenue pressure, it said in a note. Large deal wins, plans to boost growth, margin improvement measures, geographic visibility, and updates on AI-driven deals are the key factors to watch, according to IDBI Capital. HSBC: The global brokerage expects revenue to decline by 0 to 1 per cent Q-o-Q in constant currency terms for Q4, as growth in banking and manufacturing is likely to be offset by continued weakness in the hi-tech, BPS, and telecom segments. Margins are expected to remain flat, with the benefit of rupee depreciation balancing out the impact of wage hikes. The new management team acknowledges the need to invest in sales and manage costs to expand margins, HSBC said. "However, we believe the path to this turnaround is going to be challenging." The brokerage has lowered revenue estimates for FY25-27 by 2 per cent. "Consensus has moderated recently, but we do see further downside risk on FY27 margin and EPS estimates for the company."
