CITI reiterates its Sell rating on Tech Mahindra with a target price of ₹1,475. The management has outlined a new growth strategy, reorganizing into six Strategic Business Units (SBUs) directly reporting to the CEO. Focus verticals include Telecom, BFSI, Manufacturing, and Healthcare, with strong traction in AI, Cloud, Cybersecurity, and Enterprise Applications.
Tech Mahindra aims to improve margins to 15% through:
- Pyramid improvement and pricing optimization.
- Subcontracting cost reductions and utilization rate enhancements.
While management remains optimistic about long-term growth, Citi maintains its cautious stance on margin recovery and highlights ongoing challenges in cost efficiencies.
