Tech Mahindra’s share price surges by 10% following Q4 results. Is it a good time to buy? Experts weigh in.

Tech Mahindra, India’s fifth-largest IT company, experienced a surprising 10% surge in intraday trading today, reaching ₹1,309 per share despite weak financial results. The market’s positive response reflects confidence in the company’s ambitious plans for the future.

Although the company’s Q4 FY24 financial results fell short of street estimates, with a 41% decline in consolidated net profit to ₹661 crore and a 6.2% decrease in revenue to ₹12,871 crore, Tech Mahindra remains optimistic about its future prospects.

Management outlined a bold vision for FY27, aiming to surpass peers in revenue growth, achieve a 15% EBIT margin, maintain a 30%+ ROCE profile, and return >85% of FCF. Key focuses include scaling large accounts, winning multi-tower deals, and enhancing the cost structure to achieve profitable growth.

Brokerage firms like Motilal Oswal and Nuvama Institutional Equities expressed optimism about the company’s restructuring efforts under new leadership. However, they remain cautious, awaiting tangible improvements before considering a re-rating.

Centrum Broking also maintains a ‘Reduce’ rating on the stock, citing challenges in the near-term demand environment. Despite downward revisions in EPS estimates, they expect gradual recovery driven by recently signed deals.

Systematix Institutional Equities maintains a ‘Sell’ rating, valuing the stock at ₹1,005 per share, indicating an 18% downside from the current market price. However, they acknowledge potential upside risks in revenue growth and EBIT margins.

Overall, while Tech Mahindra faces near-term challenges, its ambitious long-term goals and strategic initiatives have garnered mixed reactions from analysts, highlighting the uncertainty surrounding the company’s future performance.