Tech Mahindra shares: Analysts mostly retain share price targets on TechM

Mumbai: Analysts at most top brokerages slightly raised or retained share price targets on Tech Mahindra after the IT company’s third-quarter net profit plunged 60% from the same period a year ago. The stock dropped 5.89% to close at ₹1,325 on Thursday.

The average analyst price target on Tech Mahindra by Bloomberg after the third quarter results was at ₹1,302, implying a downside of 1.67% from Thursday’s closing.

Analysts said that the company’s weaker performance indicates that turnaround would be tough in the near term, given the weak demand environment.

Analysts Mostly Retain Share Price Targets on TechM

Nomura said that despite a strong team led by new CEO Mohit Joshi, the turnaround remains challenging, however, the FY25 dividend yield of 5% is expected to be supportive.

“While new CEO Mohit Joshi reiterated the contours of his broad strategy around verticalisation of sales and delivery to drive better sales and margin outcomes in the medium term, finer details around investments needed to accelerate growth will not be known until April 2024, with the release of 4Q FY24 results,” said Nomura in a note.

HSBC said that margin expansion is contingent on “pyramid improvement” or a “pricing uptick”. Both are tough to deliver without growth, it said.

“Balancing both growth and margin recovery will be a tough act, and while management has indicated it will target profitability first, we believe a meaningful recovery will take at least a few quarters,” said HSBC in a note.

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