Shares of Tech Mahindra continued to slump for the second straight session as Bank of America downgraded the stock’s rating as it expects margin expansion to be slow.

What Happened: BofA downgraded the stock’s rating from ‘buy’ to ‘underperform’ with a price target of ₹1,040. The target price translates to a 6% downside from the stock’s last closing price of ₹1,108.95. Earlier this month, the company announced the appointment of Infosys‘s Mohit Joshi as MD and CEO. The announcement saw the company’s shares surge 6%, however, analysts were not very thrilled about the appointment.

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In their note, BofA also said that it would take around 12 to 18 months for the leadership change to start having a positive impact. The analyst expects margin expansion to be slow owing to a weak outlook.

Domestic Brokerage firm ICICI Securities also has a ‘reduce’ rating on the stock with a price target of ₹971.

Price Action: Shares of Tech Mahindra were down 1.33% to trade at ₹1,094.15 as the markets opened on Tuesday.

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