Tech Mahindra shares rose over 2% after reporting better-than-expected Q1 revenue and margins.
EBIT margin expanded for the fourth straight quarter, while deal wins topped $1 billion.
Brokerages praised execution but remained divided over the stock's current valuation.
Shares of Tech Mahindra rose more than 2% in early trade on Friday after the IT services company reported better-than-expected revenue and operating margins for the June quarter, while robust deal wins reinforced confidence in its ongoing turnaround.
The stock climbed as much as 2.54% to ₹1,548.70, making it one of the top gainers on the Nifty 50. It had closed at ₹1,515.60 on Thursday, up 1.13% ahead of its earnings announcement. Despite Friday's gains, the stock is down 5.7% so far in 2026, compared with a 7.9% decline in the Nifty 50.
4 July 2026
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IT major Tech Mahindra on July 16 reported 28% rise in net profit at Rs 1,465 crore for the quarter ended June 30, 2026. It reported net profit of Rs 1,141 crore in the year-ago period.
Revenue rose 4.2% quarter-on-quarter to ₹15,711.9 crore, surpassing the estimated ₹15,486 crore.
The company also outperformed on profitability, with EBIT increasing 8.6% sequentially to ₹2,264 crore. EBIT margin expanded 60 basis points to 14.4% from 13.8% in the previous quarter, marking the fourth consecutive quarter of margin expansion.
Another positive was the company's deal pipeline. New deal wins stood at $1.078 billion, up 33.3% year-on-year, extending Tech Mahindra's streak of quarterly deal wins above $1 billion to three consecutive quarters.
Brokerages Remain Divided On Valuation
Brokerages largely welcomed the operational performance but differed on whether the stock offers further upside after its recent recovery.
HSBC maintained its 'Buy' rating with a target price of ₹1,635, saying Tech Mahindra exceeded expectations as revenue growth accelerated to 6% year-on-year. The brokerage said margin expansion remains on track, with management targeting a 15% EBIT margin by the end of FY27, adding that stronger growth than peers supports the company's premium valuation.
Nomura retained its 'Neutral' rating and target price of ₹1,600, noting that the company beat expectations across key operating metrics and remains on track to achieve its FY27 objectives. However, it cautioned that the stock is already trading at 17.1 times FY28 earnings, limiting valuation comfort.
Jefferies reiterated its 'Underperform' rating with a target price of ₹1,260, despite raising its FY27-FY29 earnings estimates by 6-8% following the quarterly results. The brokerage said stronger deal wins support its expectation of 6% constant currency revenue growth in FY27, but argued that the stock's valuation remains expensive even after projecting a 4% revenue CAGR and 9% EPS CAGR over FY27-FY29.
