Accumulate Tech Mahindra; target of Rs 540: Emkay

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26 Aug, 2025 12:21

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Emkay's research report on Tech MahindraWe upgrade TechM to ACCUMULATE (V/s HOLD earlier) given attractive valuations at ~12x/10x FY17/18E P/E and the upcoming improvement in operational/financial performance M&A related uncertainty in the Communications vertical should reduce helping address growth challenges in large client accounts. Enterprise Business continues to do well reflected in order booking/non top 10 client revenue performance We see ‘More legs to margin reversion’ for TechM supported by pickup in revenue growth in the Communications vertical (which has a higher offshore delivery mix) and focus on operational parameters under the AQT framework Tech M is now our top pick in the large cap IT Services coverage followed by HCL Tech. We continue to have a HOLD rating on all other Tier I players. We upgrade TechM to ACCUMULATE (V/s HOLD earlier) with an unchanged TP of Rs540 given attractive valuations and upcoming improvement in operational/financial performance. Our target P/E multiple for TechM continues to be 12x 1 yr forward P/E (as compared to 14x for HCL Tech) which we believe is fair given TechM’s higher vertical/client concentration metrics. We now change our order of preference within the sector with TechM being our top pick in the large cap IT Services space followed by HCL Tech. We continue to have a HOLD rating on all other Tier I players. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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