Buy Tech Mahindra; target of Rs 1900: Motilal Oswal

Motilal Oswal's research report on Tech Mahindra

Tech Mahindra (TECHM) reported 2QFY26 revenue of USD1.6b, up 1.6% QoQ in CC vs. our estimate of 1.0% CC growth. Retail/Manufacturing/BFSI grew 9.0%/5.3%/3.8% QoQ, whereas Communications/Others fell 2.0%/8.8% QoQ (in USD terms). EBIT margin was up 100bp QoQ at 12.1%, beating our estimate of 11.6%. PAT stood at INR11.9b (up 4.7% QoQ/down 4.4% YoY), below our estimate of INR13b. In INR terms, revenue/EBIT/PAT grew 4.0%/33.3%/11.1% in 1HFY26 YoY. In 2HFY26, we expect revenue/EBIT/PAT to grow by 8.3%/34.7%/39.0% YoY. We reiterate BUY on TECHM with a TP of INR1,900 (implying 29% upside), based on 23x Jun’27E EPS.

Outlook

We continue to like TECHM’s bottom-up turnaround story. We value TECHM at 23x Jun’27E EPS with a TP of INR1,900 (29% upside). We reiterate our BUY rating on the stock.