Target: ₹1,693
CMP: ₹1,459.10
Tech Mahindra has reported a revenue of ₹13,995 crore, reflecting a 4.8% increase quarter-on-quarter (q-o-q) and a 5.1% increase year-on-year (y-o-y) in INR terms. In USD terms, revenue saw a q-o-q rise of 1.4% but a decline of 0.2% y-o-y. On a constant currency (CC) basis, the revenue was up 1.6% q-o-q, but down 0.3% y-o-y.
The company’s EBIT margin expanded by 108 basis points q-o-q to 12.1%, attributed to efficiency improvements, SG&A optimization, and better productivity in fixed-price projects. New deal total contract value (TCV) reached $816 million, compared to $603 million in the previous quarter of FY25, indicating robust deal momentum. The total workforce rose by 4,197 employees q-o-q to 152,714, although attrition increased by 20 basis points to 12.8%, and utilization fell by 60 basis points to 84.4%. Management noted that client spending remains selective, with pressures on discretionary budgets across key sectors.
The management team emphasized ongoing progress in its three-year transformation plan, underpinned by stronger deal momentum and improving profit margins. The focus remains on scaling core verticals such as communications, manufacturing, and banking, financial services, and insurance (BFSI), while enhancing AI-led and automation-driven capabilities. Recent initiatives under the IndiaAI program and the launch of TechM Orion have further bolstered its positioning within enterprise AI.
The stock is maintained with a Buy rating, with a revised target price of ₹1,693, down from ₹1,821, based on a price-to-earnings (PE) ratio of 21x (previously 22x) on projected EPS for September 2027. The reduction in the target multiple from 22x to 21x reflects an anticipated delay in the pace of revenue recovery compared to overall industry growth.
Published on October 15, 2025
