Citi has a “sell” rating on Tech Mahindra with a price target of ₹1,275 per share, a downside of 11% from its previous closing price.
The brokerage said Tech Mahindra’s management reiterated better-than–industry growth and a 15% earnings before interest, tax (EBIT) margin target for the financial year 2027.
It said industry growth remains challenging based on the recent trends. The stock is trading at a premium to its large cap IT peers, it added.
Citi said strong FY27 execution will be key for further outperformance.
Tech Mahindra’s March quarter earnings were in-line to marginally better than Street expectations across most parameters.
Its US dollar revenue of $1,625 million was up 0.9% sequentially and was above Street estimate of $1,624 million.
Its revenue in rupee terms was at ₹15,076 crore, above the CNBC-TV18 poll of 14,804 crore. It also increased 4.7% sequentially.
On a constant currency basis, its growth was at 0.6% sequentially, which was in-line with the poll of 0.5%.
Its EBIT stood at 2,084 crore, in-line with estimates of ₹2,035 crore, while EBIT margin expanded to 13.8% from 13% in the previous quarter. It was also in-line with the poll of 13.7%.
Of the 45 analysts who have coverage on the Tech Mahindra stock, 30 have a “buy” rating, six have a “hold” rating and nine have a “sell” rating.
Tech Mahindra shares were trading 1.8% lower at ₹1,409 apiece at 12.45 pm on Tuesday. The stock has declined 12.4% this year, so far.
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