The Tech Mahindra share price surged over 7% in early trade today, October 16. The company is in focus after it announced its results for the second quarter of financial year 2027 (Q2FY27) on Thursday. The stock has gained for the fourth straight session, surging 20% in this period.
Brokerage houses Motilal Oswal and Nuvama retained their ‘Buy’ ratings on the stock while Japanese brokerage Nomura maintained its ‘Neutral’ stance. Both Motilal Oswal and Nuvama have a target price of Rs 1,950, implying an upside of 10% from the stock’s current price of Rs 1,773.
Nomura raised its price target on the stock to Rs 1,650 from Rs 1,640.
Tech Mahindra posted strong numbers for Q2 FY27 as the company’s net profit and revenue reported double-digit growth, driven by strong order wins and expanding margins. The company’s consolidated profit rose 32.7% year-on-year to Rs 1,585.6 crore against Rs 1,194.5 crore reported in the year-ago period. On a sequential basis, Tech Mahindra’s bottom line expanded 6.6% from Rs 1,486.3 crore reported in the trailing quarter.
Tech Mahindra’s revenue from operations for Q2 FY27 stood at Rs 16,180 crore, rising 15.6% YoY from Rs 13,994.9 crore reported in the same quarter last year. On a quarter-on-quarter basis, topline climbed nearly 3% from Rs 15,711.9 crore reported in Q1 FY27.
Tech Mahindra remains the brokerage’s preferred pick among large-cap IT companies. Motilal expects the IT major’s revenue to grow 11.7% YoY in the second half of FY27 and adjusted net profit to rise 44.7%.
“The ongoing turnaround under the new leadership continues to track well, and this quarter was another step in the right direction as TECHM is within reach of its FY27 EBIT margin goal of 15%. We believe the company could emerge as the growth leader among the large-cap peers and continue to like the bottom-up turnaround story,” Motilal said.
The brokerage retained its ‘Buy’ ratings on the stock with a target price of Rs 1,950, implying an upside of 10%.
The brokerage expects 7% compounded annual growth rate over FY26 to FY28, in dollar terms, for the company, reflecting stronger-than-expected execution, healthy deal ramp-ups, and improving growth visibility.
“We also build in 15.1%/15.3% EBIT margin estimates for FY27/28, implying a 20bp/50bp expansion against our earlier margin estimates. However, FY27 EPS estimates are slightly lower..” it added.
The company’s four straight quarters of huge deal wins, of over $1 billion, positions it well to beat all its large-cap peers on growth in FY27, Nuvama said.
“Margins too are likely to reach close to its 15% target. Overall, Tech Mahindra is set to report a strong earnings CAGR (25%) over the next two years. This places it well to deserve valuations similar to LTIMindtree, rather than top-three large caps. We expect current valuations to sustain,” the brokerage said.
Nuvama retained its ‘Buy’ ratings on the stock with a target price of Rs 1,950, implying an upside of 10%. Its management also expects AI-led productivity and automation to support profitable growth and margins.
The ramp-up of two mega deals in the Telecom vertical and growth in other verticals should continue to help the company achieve above-peers growth rate in FY27, Nomura said. While there will be a 50-bps impact from an European auto client next quarter, overall strong deal wins in the September quarter should support growth for the rest of the year.
Nomura maintained its ‘Neutral’ stance and raised its price target on the stock to Rs 1,650 from Rs 1,640. This implies a 7% downside from current levels.
“The key levers to improve EBIT margin in FY27E vs FY26 include AI-led productivity gains, such as converting time and material contracts to fixed-price, and continued operational efficiencies under program Fortius, according to management. Over the longer term, the company intends to use the gross margin tailwinds from its AI initiatives and service offerings to improve overall margins while continuing to invest for growth,” Nomura said.
Brokerages have given a thumbs up to the $1 billion deal win. Many see as much as 25% growth in the annual earnings outlook for the tech major. They see this stock as best placed among large cap tech peers, with respect to future growth potential.