Tech Mahindra Shares Fall 2% After Q1 Earnings Disappoint; What Should Investors Do? | Markets News

Last Updated:July 17, 2025, 13:49 IST

Tech Mahindra Share Price: Tech Mahindra shares declined as much as 2% on Thursday to Rs 1,575 on the BSE

Tech Mahindra Share Price

Tech Mahindra Share Price: Tech Mahindra shares declined as much as 2% on Thursday to Rs 1,575 on the BSE after the company’s June quarter earnings fell short of Street expectations. While the IT major reported a 34% year-on-year (YoY) jump in consolidated net profit to Rs 1,141 crore in Q1FY26—up from Rs 851 crore in the same period last year—it missed analysts’ estimates of Rs 1,211 crore.

Revenue rose 2.7% YoY to Rs 13,351 crore, compared to Rs 13,005 crore in Q1FY25. However, this was slightly below Street projections of Rs 13,374 crore. Earnings before interest and tax (EBIT) stood at Rs 1,477 crore, marking a 34% YoY growth.

Despite the margin expansion and strong deal wins, brokerages had mixed views on the overall performance, citing weak topline growth, a challenging macro environment, and valuation concerns. Here’s how leading brokerages reacted post results:

Motilal Oswal:

The brokerage maintained a ‘Buy’ rating with a target price of Rs 2,000, implying an upside of 24%. It highlighted positive developments across key areas, including stability in the Communications vertical, robust deal wins, and a stronger margin profile. Motilal believes that the company’s FY27 EBIT margin target of 15% is realistic if revenue momentum improves, and sees the turnaround under new leadership as tracking well.

Nomura:

Nomura also retained its ‘Buy’ recommendation but trimmed its target price slightly to Rs 1,810 from Rs 1,840. While acknowledging the mixed nature of Q1 performance, it remains optimistic about Tech Mahindra’s medium-term transformation efforts. The brokerage expects revenue growth to pick up in FY26, with margin expansion to 13.7% by FY27, supported by strong deal momentum in the Telecom segment.

Emkay Global:

In contrast, Emkay maintained a ‘Reduce’ rating with a target price of Rs 1,600, close to current levels. It cited high valuations and trimmed FY26–28 earnings estimates by up to 2.4% after the company missed profit estimates. Emkay believes much of the anticipated margin recovery is already priced in and values the stock at 20x its projected FY27 earnings.

Nuvama:

Nuvama also stuck to a ‘Reduce’ call and lowered its target price to Rs 1,300, suggesting a potential 17% downside. It flagged limited headroom for further margin improvement, especially given the weak macro backdrop and low revenue growth. Despite strong deal wins, Nuvama noted that Tech Mahindra trades at valuations comparable to larger peers while delivering lower margins and returns.

Morgan Stanley:

The brokerage reiterated its ‘Underweight’ rating, assigning a target price of Rs 1,555—slightly below current market levels. While it acknowledged strong margins and deal wins, Morgan Stanley warned of execution risks in converting deals into revenue. It also highlighted weak demand in manufacturing and a challenging global outlook.

Jefferies:

Jefferies remained ‘Underperform’ with a target price of Rs 1,400, indicating an 11% downside. The brokerage pointed out that the profit beat was largely driven by higher other income rather than operational performance. It expressed doubts over the company’s ability to meet its 15% EBIT margin goal by FY27, arguing that it would require sustained improvement every quarter—something that may be difficult amid wage hikes and tepid revenue growth.

Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

Aparna Deb

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More

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