Tech Mahindra rallies close to 4% after Q1 earnings; CLSA, Macquarie raise target price

Tech Mahindra rallied over 3 percent in morning trade on Tuesday even though it reported earnings were below expectations. The Mumbai-headquartered firm posted a consolidated profit after tax (PAT) of Rs 898 crore, a 26.5 percent sequential fall as against average analysts' estimates of Rs 912.6 crore. PAT in the previous quarter was Rs 1,222 crore.

In rupee terms, the IT services giant reported a 2.8 percent quarter-on-quarter and 12.8 percent year-on-year growth in revenue at Rs 8,276 crore. It reported a dollar revenue of $1,224.1 million, up 7.5 percent YoY and down 1.6 percent sequentially.

Reacting to the result, CLSA upgraded the stock to underperform from sell earlier and has also raised its target price to Rs 650 per share from Rs 635 earlier. As margin recovery comes to a halt, the global investment bank advises investors to watch for a recovery in growth.

Another global investment bank, Macquarie, maintains its neutral rating on the counter but raised the target price to Rs 700 per share from Rs 670 earlier. It raised its EPS estimates to factor in a weaker rupee-dollar.