Tech Mahindra shares zoom 10% as strong FY27 vision overshadows weak Q4 numbers

Jefferies has maintained an underperform call on the stock saying that weak order booking & headcount declines point to a weak growth outlook. HSBC has also maintained a hold call saying that a new turnaround plan looks sensible for the company, adding that execution remains challenging, especially in the current environment.

JPMorgan has also maintained an underperform rating on but raised the target price to Rs 1100 from Rs 1050 earlier.

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"The road to recovery is very long. The management commentary was good enough to keep the narrative going for TechM's turnaround story. Targets are well meaning but too far out in the future to adhere to in a business that feels like a quarterly/monthly treadmill," it said.

Jefferies has reduced its target price on Tech Mahindra to Rs 1,065 and UBS has reduced it to Rs 1,200.

After announcing Q4 numbers, Tech Mahindra MD and CEO Mohit Joshi unveiled his 'Vision 2027' strategy, conveying 4 key goals - revenue growth above peer average, EBIT margin of 15%, ROCE of over 30% and returns more than 85% of free cash flow to shareholders.

While FY25 is pegged as a year of turnaround, it should still be better than FY24, the company management said.

"We believe ambitious FY27 goals and capital allocation would support valuations, while execution of the strategy will drive a sustained re-rating of the stock," said while reducing its target price to Rs 1,350.

Among other domestic firms, Motilal Oswal has maintained a neutral rating on the stock with a target price of Rs 1,210 while Nuvama sees the stock falling to Rs 1,000.

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