Tech Mahindra shares rise 1.5% after Q3 PAT jumps 93% YoY. Should you buy, sell, or hold?

Shares of Tech Mahindra rose as much as 1.5% on Monday to Rs 1,683 on the BSE, after the company reported a 93% growth in consolidated net profit for the quarter ended December 31, 2024.

The bottom line stood at Rs 983 crore (attributable to shareholders of the company), compared to Rs 510 crore reported in the same period last year.

Meanwhile, the revenue from operations in Q3FY25 stood at Rs 13,286 crore, marking a 1.4% increase from Rs 13,101 crore in the year-ago period.


In dollar terms, the revenue for the reported quarter stood at $1,567 million, down 0.4% YoY, and declined 1.3% QoQ.

Its Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) for Q3FY25 stood at Rs 1,809 crore, reflecting a 3.4% increase on a QoQ basis and a 57.8% rise YoY.

Should you buy, sell, or hold Tech Mahindra's stock? Here's what analysts say:

Nomura

Nomura maintained a 'Buy' rating on Tech Mahindra with a target price of Rs 1,900.

The company showed steady progress towards its medium-term goals, with a Q3FY25 performance beating expectations across all parameters. Nomura has revised its FY25-27 EPS estimates by 0-2%. It expects YoY dollar revenue growth of 0.9-9.2% and EBIT margins of 9.3-13.2% for FY25-27. Further deterioration in discretionary demand is unlikely.

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Morgan Stanley

Morgan Stanley maintained an 'Equal Weight' rating on Tech Mahindra with a revised target price of Rs 1,750 (up from Rs 1,725).

It sees low upside risks to margins, with a conservative revenue growth forecast due to the company's portfolio mix. Earnings exceeded estimates, driven by growth in the healthcare, BFSI, and other verticals. Tech Mahindra also secured solid new deal wins of $745 million, marking a 24% QoQ increase.

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Citi

Citi maintained a 'Sell' rating on Tech Mahindra with a revised target price of Rs 1,440 (down from Rs 1,475).

The company's EBIT came approximately 4% below expectations, despite some support from provision reversals. Forward-looking indicators show a 3% YoY increase in headcount and a 21% YoY rise in TTM TCV on a low base. Citi has lowered its FY25-27 EPS estimates by 3-4%, factoring in Q3 trends and management comments. Despite high expectations, the tough sector backdrop and wage hikes are expected to impact Q4 margins. FY26-27 EPS estimates are 7-10% below consensus.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)