Tech Mahindra Q4 Results Review - Turnaround In Progress: IDBI Capital

IDBI Capital Report

Tech Mahindra Ltd. reported 1.6% QoQ de-growth in Q4 FY24 and was below our estimates. Going forward the company believes that Q4 was the lowest growth on YoY terms and expects growth to improve over the coming quarters.

The company has laid down strategy till FY27E wherein the company aims to have a turnaround in FY25E, stabilise in FY26E and grow in line with peers by FY27E.

Further, Tech Mahindra aims to achieve 15% margins by FY27E from 6% in FY24. The company will achieve the same by $250 million annual cost savings (~4% of revenues) offset by 1.5% of investments.

While we have factored in most of the growth and margin expectation, we believe execution is the key.

Hence, we maintain our Hold rating with a target price of Rs 1,265 (18 times FY26E earnings per share).

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