Tech Mahindra Hold: ICICI Securities Sets Rs 1600 Target

TECH
Whalesbook Logo
AuthorAarav Shah|Published at:
Tech Mahindra Hold: ICICI Securities Sets Rs 1600 Target
Overview

ICICI Securities maintained a 'Hold' rating on Tech Mahindra, assigning a target price of ₹1,600. The brokerage noted a strong turnaround post new CEO Mohit Joshi's appointment, citing improving deal momentum and faster growth in large accounts as key drivers. Management aims to reach a 15% EBIT margin by FY27.

Turnaround Trajectory

Tech Mahindra is showing signs of a robust turnaround, marked by an all-round strong performance in the December quarter of FY26. This positive momentum follows the appointment of Mohit Joshi as the new CEO in December 2023. The company's management is aiming to outperform its large-cap peers in the fiscal year 2027, signaling renewed ambition.

Growth Catalysts

This optimistic outlook is underpinned by several strategic initiatives. Management highlighted an improving deal-win momentum, suggesting an enhanced pipeline of future business. Furthermore, gains in market share within the communication vertical are expected to drive revenue acceleration compared to FY26. The company is also seeing faster growth in accounts generating USD 20 million revenue run-rate, driven by improved cross-sell and up-sell opportunities.

Margin and Earnings Outlook

Tech Mahindra has reiterated its target of achieving a 15% EBIT margin by the end of FY27. This ambitious goal is primarily expected to be driven by improvements in gross margins, indicating better cost management and operational efficiency. In response to the improving growth trajectory, ICICI Securities has raised its Earnings Per Share (EPS) estimates by 4% for FY27 and 2% for FY28.

Valuation and Recommendation

ICICI Securities continues to value Tech Mahindra using a 19x Price-to-Earnings (P/E) multiple on its December 2027 estimated EPS of INR 84, arriving at a target price of ₹1,600. Despite the positive developments and revised estimates, the brokerage maintains a 'Hold' recommendation. This stance reflects the view that the stock has already undergone a significant re-rating, with the market likely pricing in the expected turnaround in earnings.

Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.