Tech Mahindra share price skyrockets 10% after Q4 results. Should you buy on the rise? Here's what experts say

The institution released its fiscal results for Q4 FY24 and the afloat fiscal twelvemonth FY24 post-market hours connected Thursday, falling abbreviated of thoroughfare estimates. In Q4 FY24, its consolidated nett net plummeted astir 41% to ₹661 crore, portion gross declined by 6.2% year-on-year to ₹12,871 crore. 

For the afloat FY24, the consolidated nett net saw a crisp diminution of 51.2% year-on-year to ₹2,358 crore, with gross lasting astatine ₹51,996 crore, marking a 2.4% alteration implicit the erstwhile fiscal year.

Despite the important nett decline, the institution outlined ambitious objectives for the adjacent 3 years. Management revealed its imaginativeness for FY27, aiming to surpass peers successful gross growth, execute a 15% EBIT borderline by FY27, support a 30%+ ROCE profile, and instrumentality >85% of FCF by FY27. 

Key focuses see scaling ample accounts, winning multi-tower deals, leveraging synergies from past acquisitions, enhancing the outgo structure, and achieving profitable and accordant growth. The aspiration is to fertile among the apical 3 IT services companies successful presumption of margins post-FY27.

Motilal Oswal, a home brokerage firm, expressed optimism astir the restructuring astatine TECHM nether caller leadership, viewing caller initiatives positively, specified arsenic SBU right-sizing, investments successful apical accounts, the constitution of vertical transportation teams, and worker investments. 

However, the brokerage remains cautious, awaiting tangible improvements from the restructuring and revamped strategy earlier considering a re-rating. Despite the management's people of achieving a 15% EBIT borderline by FY27, the lack of maturation and near-term investments whitethorn hinder important borderline betterment successful the abbreviated term. 

Consequently, the brokerage maintains its 'Neutral' standing connected the stock, with a terms people of ₹1,210 apiece, and somewhat adjusts FY25/FY26 EPS estimates downward by 0-1% station the 4QFY24 results.

Nuvama Institutional Equities: Continue with the 'Reduce' rating 

"The caller CEO, Mr Mohit Joshi, laid retired his FY27 strategy—to instrumentality TechM up of peers’ mean maturation and to a 15% EBIT margin. While these targets are achievable, we reason the steps needed to execute them volition incur important near-term pain. We are trimming FY25E/26E by -2%/-1.5%. We proceed to complaint TechM ‘REDUCE’ with an unchanged TP of INR1,000, valuing the banal astatine 16x FY26E PE," said Nuvma.

Centrum Broking: Maintains 'Reduce' Rating

Centrum Broking has reiterated its 'Reduce' standing connected the stock, citing a challenging near-term request situation and unit connected discretionary spending by clients. The brokerage foresees a gradual betterment successful FY25, driven by the ramping up of precocious signed deals. 

It expects revenue, EBITDA, and PAT to turn astatine 8.2%, 45.1%, and 64.2% implicit FY24-FY26E. However, Centrum has downwardly revised its FY25E/FY26E EPS by 7.0%–7.1%. The brokerage maintains its people terms for the banal astatine ₹1,194 (revised from ₹1,285 earlier), applying a PE aggregate of 17x (unchanged) connected FY26E EPS.

Systematix Institutional Equities: Maintains 'Sell' rating

The banal is trading astatine a 31.7x 1-year guardant multiple, representing a 66% premium compared to its past 10-year humanities valuations. The brokerage values the banal astatine 16x FY26EPS, mounting a people terms of ₹1,005 per share, indicating an 18% downside from the existent marketplace terms (CMP). 

However, it acknowledges that the betterment successful gross maturation and TCV numbers, on with the institution returning to a maturation trajectory and important betterment successful EBIT margins, airs cardinal upside risks to its telephone and estimates.

Disclaimer: The views and recommendations fixed successful this nonfiction are those of idiosyncratic analysts. These bash not correspond the views of Mint. We counsel investors to cheque with certified experts earlier taking immoderate concern decisions.

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Published: 26 Apr 2024, 09:37 AM IST