Synopsis:
Tech Mahindra ltd shares dropped by 1.67 % following the results. In Q1FY26 the revenue and profits increased slightly, but brokerages are still cautious because of the company’s poor revenue conversion and macro challenges.
A large cap IT stock is in focus today after declaring financial results for Q1FY26. Check the below article to know about their performance and future target given by the analyst.
With a market capitalization of Rs. 1,55,542 crores, the shares of Tech Mahindra Ltd were trading at Rs. 1581, down by 1.67 percent from its previous closing price of Rs. 1607.90.
Q1FY26 Results
Tech Mahindra reported Rs. 13,351.2 crores in revenue for the first quarter of FY26, a slight 2.65 percent increase over the Rs. 13,005.5 crores for the same period in FY25. However, decreased by 0.25 percent as compared to Rs. 13,384 crores in Q4 FY25.
The consolidated net profit for the first quarter of FY26 was Rs. 1,140.6 crores, which was 2.24 percent lower than the Rs. 1,166.7 crores reported in the previous quarter and 33.95 percent higher year over year than the Rs. 851.5 crores in Q1 FY25.
Profit growth was also reflected in earnings per share (EPS), which increased to approximately Rs. 12.86 in Q1 FY26 from Rs. 9.60 in Q1 FY25, while decreased from Rs. 13.15 in Q4 FY25.
Management View
CEO Mohit Joshi claims that focused strategy and disciplined execution are the reasons behind Tech Mahindra’s performance’s steady improvement. Over the past 12 months, the company’s deal wins have increased by 44 percent, with growth occurring across a range of industries and regions.
CFO Rohit Anand emphasized that the company’s seven consecutive quarters of margin expansion demonstrate a high level of organizational focus and discipline. The Project Fortius initiative continues to produce notable operational improvements in spite of a challenging environment.
About the company
Tech Mahindra Ltd is one of the top providers of IT services and consulting worldwide, Tech Mahindra provides a wide range of solutions, including digital transformation, enterprise business solutions, IT-enabled services, and application development. With more than 148,000 professionals working in more than 90 countries, it provides services to more than 1,100 clients in a variety of industries.
Analyst Outlook
Morgan Stanley reduced the target price for Tech Mahindra from Rs. 1,575 to Rs. 1,555 and kept its ‘Underperform’ rating. Strong deal wins, client stability, and margin improvement were among the company’s notable positives, despite its strong margin delivery.
However, concerns about a poor deal-to-revenue conversion rate, which is a challenging outlook for industries like manufacturing, and a weak macroeconomic outlook.
With regard to Tech Mahindra, Jefferies has kept its ‘Underperform’ rating and lowered the target price from Rs. 1,430 to Rs. 1,400. Profits exceeded projections, but revenue was below expectations and is still under pressure despite significant deal wins. According to the brokerage, the target of 15 percent margins by FY27 appears overly optimistic and calls for consistent and significant quarterly margin increases.
Written By Akshay Sanghavi
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