Tech Mahindra reported a 16% year-on-year rise in profit for the March quarter, reaching ₹1,354 crore, as revenue climbed 13% to ₹15,076 crore. Despite the earnings growth, brokerage opinions remain divided, with some betting on a turnaround in the communications business while others flag concerns over high valuations and broader industry challenges.
What Happened
Tech Mahindra released its financial results for the quarter ending March 2026, showing a 16% year-on-year increase in net profit, which stood at ₹1,354 crore. Revenue from operations grew by 13% during the same period, reaching ₹1,354 crore. While the company's financial figures show growth, analysts are debating whether the stock's current price accurately reflects the company's future prospects, given the ongoing pressures in the broader IT services industry.
Profit, Revenue And Margin Picture
Beyond the headline numbers, the company showed improvements in operational efficiency. Earnings Before Interest and Taxes (EBIT) increased by 10.2% quarter-on-quarter, totaling ₹2,084 crore. The EBIT margin also saw a sequential improvement of 70 basis points (0.7 percentage points), reaching 13.8% for the quarter. In terms of staffing, the company reported a total headcount of 147,623, which is a slight reduction of 1,108 employees compared to the previous year. The attrition rate for the IT segment was reported at 12.1%.
The Brokerage Divide
Financial analysts currently hold very different views on the stock's future. Motilal Oswal has maintained a 'buy' rating, setting a target price of ₹1,750. Their positive outlook is based on the company's FY27 strategic plan, which is entering its final year. Analysts at the firm noted early signs of a turnaround in the communications business, supported by a large European deal, and expect continued margin improvement.
In contrast, Citi has assigned a 'sell' rating to the stock, with a target price of ₹1,275. Their cautious stance is rooted in the challenging environment for the IT industry as a whole. Citi argues that Tech Mahindra is trading at a premium valuation compared to its large-cap peers, meaning the company needs to deliver very strong growth to justify its price, which they find uncertain given current sector headwinds.
What To Watch Next
Investors will likely track whether the company can maintain the current margin momentum in the coming quarters. A critical point to monitor is the management's commentary on new targets for the next fiscal year, following the completion of the FY27 strategic plan. Additionally, the performance of the communications vertical remains a focal point, as sustained recovery in this segment is essential for meeting growth expectations. The market will also assess if the company's valuation gap narrows as the broader IT sector trends evolve.