Tech Mahindra shares fall 4% to become top Nifty 50 loser after Q1 results.
Shares of Tech Mahindra Ltd. declined by up to 4% on Friday, July 26, despite reporting solid Q1 results.
Shares of Tech Mahindra Ltd. fell by as much as 4% in trading on Friday, July 26. Analysts from various brokerage firms have mixed views on the stock's performance, despite the company reporting solid Q1 results. Nuvama Institutional Equities maintained its 'Reduce' recommendation, citing expected near-term challenges before any long-term benefits, though it raised the price target from ₹1,000 to ₹1,200.
Nuvama noted that Tech Mahindra had a decent first quarter under MD and CEO Mohit Joshi's strategy, overcoming Q1 seasonality, but anticipated a challenging path ahead to meet targets. They highlighted difficulties in growth with telecom comprising 33% of revenue and potential margin headwinds from building bench strength and investing in growth.
Similarly, Kotak Institutional Equities retained its 'Reduce' rating but increased the price target to ₹1,400. Kotak acknowledged Tech Mahindra's positive start in its turnaround journey and improved demand environment in certain areas. However, they emphasized the need to navigate telecom challenges and reflected on the stock's valuation compared to HCL Tech and Infosys, noting a reduced margin of safety.
Conversely, Emkay Global maintained an 'Add' rating and raised its price target from ₹1,425 to ₹1,650. Emkay cited positive client reception of Tech Mahindra's 'speed at scale' strategy and reiterated management's view that FY25 should outperform FY24. They noted the solid start in achieving the company’s 'Vision 2027' strategy and increased their target multiple from 19 to 22 times.
Among global firms, Bernstein showed optimism with an 'Outperform' call and a target price of ₹1,390, citing an EBIT margin beat and cost-saving efforts under project Fortius. Nomura, with a 'Buy' rating and a price target of ₹1,600, highlighted expected continued margin improvement despite a slight revenue decline in FY25, followed by a rebound in FY26. UBS and Citi Research maintained 'Sell' ratings but raised their target prices to ₹1,250 and ₹1,260, respectively.
Out of 45 analysts covering Tech Mahindra, 21 recommend 'Buy,' 10 suggest 'Hold,' and 14 advise 'Sell,' with a consensus implying a potential downside of about 7% from current levels.
Shares of Tech Mahindra Ltd. recovered from the day's low and are trading 2.21% lower at ₹1,496.15, with the stock gaining over 15% in 2024.
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