Tech Mahindra Post Q1 Results: Buy, Sell Or Hold?

Tech Mahindra’s stock experienced a drop of more than 5% in early trading on Thursday following the company’s earnings report for the June quarter.

Tech Mahindra Q1 Performance: Tech Mahindra’s Q1FY24 revenue dropped by 4.1% compared to the previous quarter but increased by 3.5% year-on-year to ₹13,159 crore. Its consolidated profit after tax (PAT) for the same quarter stood at ₹693 crore, a decrease of 38% quarter-on-quarter and 38.8% year-on-year.

The company reported its earnings before interest, taxes, depreciation, and amortization (EBITDA) at ₹1,338 crore, down 33.8% quarter-on-quarter and 28.8% year-on-year, and earnings per share (EPS) at ₹7.82. The company saw a decrease in both its deal wins and workforce during Q1FY24.

What are brokerages saying? Brokerage firms have cautioned about Tech Mahindra, citing the persistent economic challenges that could suppress the sector. They noted the ongoing pressure in the communications, media, and entertainment (CME) vertical could affect Tech Mahindra’s growth.

Brokerage firm Motilal Oswal Financial Services retained its ‘neutral’ rating for the stock with a target price of ₹1,080, while Nirmal Bang has a ‘sell’ recommendation on the stock with a target price of ₹944. Global brokerage firm Jefferies also maintained an ‘underperform’ rating for the stock with a target price of ₹900. ICICI Securities also has a ‘sell’ rating on the stock with a price target of ₹910.

Price Action: Tech Mahindra shares, which opened at ₹1,100.05 compared to the previous closing price of ₹1,144.05, hit an intraday low of ₹1,082.30 early on Thursday before recovering to ₹1,112 at the time of publishing.

Over the past year, Tech Mahindra’s shares, which saw a 16% increase, have underperformed the Sensex equity benchmark’s 21% gain.

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Posted In: EquitiesPrice TargetReiterationMarketsAnalyst RatingsTech Mahindra