Jefferies has maintained its Underperform rating on Tech Mahindra, assigning a target price of ₹1,430—implying a downside of 13.6% from the current market price of ₹1,655.00. While the brokerage acknowledged positive signals in the company’s annual report, it expressed skepticism over the achievability of management’s long-term margin targets.
The annual report (AR) review revealed encouraging trends among Tech Mahindra’s employees and subsidiaries. However, Jefferies flagged concerns around the feasibility of achieving a 15% operating margin by FY27. According to the brokerage, reaching this goal would require employee-related costs to grow at a pace 3% slower than revenue growth, while pass-through and overhead expenses would have to remain flat.
Despite factoring in optimistic assumptions of over 15% margins and more than 6% growth by FY27, Jefferies believes the current valuation already prices in best-case outcomes, leaving the risk-reward balance unfavourable at present levels.
Disclaimer: The views expressed above are those of Jefferies and do not constitute investment advice. This article is for informational purposes only.
