Buy Tech Mahindra; target of Rs 1730: Choice Equity Broking

Choice Equity Broking's report on Tech Mahindra

TECHM is pivoting its growth through various vectors with focus on growing large client accounts, playing on Data, AI, Cloud and Engineering services-led themes and Fixed-Price projects to yield better productivity gains. Even the large deal wins and quality of pipeline is seeing uplift as the company recently expanded its relationships with a number of large clients and added a strong list of new clients. However, given the current weak macros, we believe TECHMs strategic turnaround journey, which began a year & a half ago, will take sometime to exhibit promising yet sustainable growth in the near term. We have revised our estimates downwards and expect Revenue/EBIT/PAT to expand at a CAGR of 7.3%/24.5%/21.7%, respectively, over FY25–FY28E.

Outlook

We have also revised our PE multiple to 22.0x (earlier 24.0x) to arrive at a revised target price of INR 1,730 from INR 1,931 and maintained our BUY rating.

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