Buy Tech Mahindra; target of Rs 1754: Deven Choksey

Deven Choksey is bullish on Tech Mahindra has recommended buy rating on the stock with a target price of Rs 1754 in its research report dated October 15, 2025.

Broker Research

October 16, 2025 / 12:23 IST

Buy

26 Aug, 2025 12:21

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Deven Choksey's research report on Tech Mahindra

Revenue stood at INR 1,39,949 Mn, up 4.8% QoQ and 5.1% YoY, slightly ahead of our estimate by 2.9%, driven by traction in key verticals and improved deal conversions across the US and Europe. EBIT came in at INR 16,993 Mn, up 15.0% QoQ up 32.7% YoY, above our estimate by 4.1%; sequential improvement was supported by higher utilization and cost optimization despite continued wage pressures. EBIT margin stood at 12.1%, in line with our estimate of 12.0%, as operating leverage gains were partly offset by elevated employee costs. PAT was at INR 12,017 Mn, up 6.5% QoQ and down 4.4% YoY, marginally below our estimate of INR 12,872 Mn due to a higher effective tax rate; PAT margin stood at 8.6% vs 9.5% in Q1FY26, a contraction of 90 bps QoQ. IT services segment revenue rose to INR 1,17,669 Mn, up 4.5% QoQ, while the BPS segment grew 6.7% QoQ to INR 22,280 Mn; higher BPS contribution aided blended growth as the share of IT stood at 84% and BPS at 16% of total revenue. On geographical mix, growth was led by the Americas, while Europe showed steady traction; improvement in the US communication vertical offset softness in manufacturing and BFSI.

Outlook

We have rolled forward our valuation to Sep’27 estimates and revised our target multiple to 23.0x (vs. 24.0x earlier) to reflect our cautious stance amid near-term growth uncertainties. We value Tech Mahindra at 23.0x Sep’27 EPS, arriving at a target price of INR 1,754 and upgrade our rating from “ACCUMULATE” to “BUY” on the stock.

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