Why Does Centrum Broking Stay Bullish on Tech Mahindra Despite Industry Slowdown?
Centrum Broking has reaffirmed its Buy rating on Tech Mahindra with a revised target price of ₹1,693 (earlier ₹1,821), reflecting confidence in the company's operational turnaround and margin improvement trajectory. The brokerage assigns a valuation multiple of 21x FY27E EPS, slightly trimmed from 22x to account for the slower revenue recovery versus peers.
Tech Mahindra reported a consolidated revenue of ₹13,995 crore, up 4.8% sequentially and 5.1% YoY in INR terms. In constant currency, the growth stood at 1.6% QoQ and 0.3% YoY, indicating modest momentum amid a challenging demand environment.
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EBIT margins expanded 108 bps QoQ to 12.1%, driven by efficiency gains, SG&A optimization, and productivity improvements in fixed-price projects. New deal wins stood at $816 million, reflecting 35% sequential growth and sustained client confidence in Tech Mahindra’s delivery model.
Headcount rose by 4,197 to 1.52 lakh employees, with attrition moderating to 12.8%. Utilization also improved to 84.4%. The company’s focus remains on scaling verticals such as communications, manufacturing, and BFSI, supported by AI and automation-led digital initiatives.
The management highlighted steady progress under its three-year transformation plan, bolstered by stronger deal momentum, the IndiaAI programme, and the launch of TechM Orion platform for enterprise AI integration. These initiatives are expected to enhance long-term profitability and competitiveness.
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Centrum believes Tech Mahindra’s recovery, though gradual, will accelerate from H2FY26 onwards as enterprise AI and automation projects scale up. The brokerage expects EBIT margin improvement and steady deal conversions to drive medium-term earnings growth.
Investor Takeaway: Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, observes that Centrum’s moderate stance on valuation combined with improving AI-led efficiency positions Tech Mahindra for a healthy margin cycle ahead, albeit with cautious optimism.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
