Why Tech Mahindra Shares Are Up 10% Even As Profits Slipped 40% In Q4

Shares of Tech Mahindra were rocketing on Friday morning going up 10% to hit an intraday high of ₹1,309.30.

What Happened: The IT firm reported a consolidated net profit of ₹661 crore for the quarter ended March, marking a 40% decrease from ₹1,117.7 crore in the same quarter last year. Additionally, the company’s consolidated revenue from operations declined by 6.1%, reaching ₹12,871 crore compared to ₹13,718 crore in the corresponding quarter.

The company's results come as several peers have felt burnt at the bourses after lukewarm results. Infosys and LTIMindtree both slumped sharply after reporting results.

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Analyst Reactions: While the analysts were not mighty impressed by the company’s Q4 numbers, they seem impressed by the company’s plans for the future. Jefferies maintained its “underperform” rating on the stock cutting the price target to ₹1,065 from ₹1,080. The research firm said that the IT giant’s revenue was in line with its estimates, but profits were below expectations.

Macquarie maintained its “underperform” rating for the stock with a price target of 930. The brokerage said it likes the company’s ambitious plan to grow faster than the peer average by FY27. The company also expects to expand margins to 15% by FY27. However, the brokerage expressed concerns about the company’s communications vertical concentration.

JP Morgan maintained its “underperform” rating for the stock raising the price target to ₹1,100 from ₹1,050. The brokerage said that the company’s ambitious target of FY27 is a little too far for now.

Kotak Securities also maintained its “reduce” rating for the stock with a price target of ₹1,220. The brokerage highlighted that the total contract value declined by 35.3% yoy, which was a “poor outcome.”

Emkay, on the other hand, maintained its “add” rating for the stock. The brokerage said that the company’s Q4 results were in-line with its estimates.

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