Brokerages mixed on Tech Mahindra following Q1 show, shares fall; should you buy, sell, or hold shares?

Tech Mahindra reported a net profit of Rs 1,141 crore for the April-June quarter.

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Information and technology player Tech Mahindra Ltd (TechM) shares fell on Thursday, July 17, after the Mahindra Group company posted its earnings show for the three months ended June 30, 2025. Brokerages remained mixed on their outlook for the firm following strong deal wins during the quarter, while the revenue came in under estimates.

Tech Mahindra delivered a strong performance in Q1 FY26, with net profit rising 34 percent year-on-year to Rs 1,141 crore, up from Rs 852 crore a year earlier. The jump in profit came as revenue increased and overall expenses stayed flat.

Consolidated revenue grew 3 percent year-on-year to Rs 13,351 crore, while total expenditure edged down slightly to Rs 11,952 crore, aiding margin improvement.

However, revenue from the Americas, which contributes nearly half of the company’s total revenue, declined 5.9 percent year-on-year. Net new deal bookings rose to $809 million, up from $798 million in the previous quarter and $534 million in the same period last year.

At 9.40 a.m., shares were quoting Rs 1,589.7, down 1.3 percent on the NSE.

Should you buy, sell, or hold shares of Tech Mahindra?

International brokerage CLSA has an 'outperform' rating with a Rs 2,020 target. The company reported an in-line EBIT, with strong order wins and better margins offsetting slower revenue. CLSA expects growth to pick up from the next quarter, with FY26 revenue likely to surpass FY25.

TechM's Q1FY26 is in line with the FY27 strategy, and the management expects above-average growth in FY27, though delays in margin expansion remain a key risk, said HSBC. The brokerage maintained a 'buy' call with a Rs 1,900 target.

While the earnings show for the quarter were mixed, the deal wins and pipeline are strong, Nomura noted, expecting better revenue growth in FY26. Nomura has a 'buy' rating on TechM's shares and a Rs 1,810 target price.

Jefferies retained an 'underperform' call with a Rs 1,400 target, while Morgan Stanley has an 'underweight' rating with a Rs 1,555 target. The brokerages noted that Q1 revenue missed but profits beat due to higher other income. Order wins were strong, but rich valuations and margin expansion challenges keep its cautious view.

The positives for Tech Manhindra are as robust deal wins, stable top clients, and gradual margin improvement. However, concerns remain over weak deal conversion, a challenging manufacturing outlook, and macro headwinds that may impact the balance between growth and margins.

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