IT Services Major Tech Mahindra shares rose 12% in early trade on April 26th, after the company reported its latest earnings for the Q4FY24. Despite a mixed reception from brokerage firms in response to its Q4 results, the IT services giant quickly emerged as the top performer on the Nifty 50.
Brokerage Perspectives
Opinions were divided among brokerage firms after the release of Tech Mahindra’s fourth-quarter results for the financial year 2023-2024. On the contrary, CLSA maintained a buy rating and they considered a price of INR 1,589 per share for the holding, but HSBC insisted on keeping it with a price target price of INR 1,300 per share. On the other hand, Jefferies took a cautious stance and rated the stock as ‘Underperform’ and cut the price target to INR 1,065 per share.
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Key Insights from Brokerages
CLSA brokerage expressed confidence in Tech Mahindra’s ability to meet its targets for FY27, despite downward adjustment of its EBIT margin and EPS estimates for FY25/26. It highlighted both positive and negative indicators for Q4, painting a nuanced picture of the company’s current state and prospects.
HSBC – While recommending Hold the stock, HSBC called Tech Mahindra’s turnaround plan sensible, but stressed the challenges of implementation, especially in the current market conditions. It underlined the importance of margin expansion and cautioned investors about potential headwinds.
Jefferies analysis points to weak order bookings and a decline in headcount, indicating slower growth. The brokerage revised its estimates downwards, estimating growth and margin improvement in FY26/27. This echoed concerns about the implementation of the company’s growth strategy.
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CEO’s Optimistic Outlook
Tech Mahindra Chief Executive Officer (CEO) Mohit Joshi said in a statement after the earnings that the company expects a better financial year in 2025. Mohit Joshi also outlined the company’s strategic priorities, including the integration of front-end portfolio businesses, and the launch of Project Fortius aimed to optimize costs and focus on savings of USD 250 million per year.
Disclaimer
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