Jefferies has reiterated its ‘Underperform’ rating on Tech Mahindra with a target price of ₹1,400, highlighting that while Q1FY26 profit beat estimates, the revenue decline and weak margin profile raise red flags.
Revenue came in at ₹13,351 crore, down 0.25% QoQ, while EBIT margins improved modestly to 11.1%. However, Jefferies emphasized that the 15% margin target for FY27 appears very optimistic given the current margin base and the ongoing cost pressures from wage hikes, competitive intensity, and demand-side uncertainty.
The firm flagged that achieving 75 basis points of margin expansion every quarter for the next seven quarters to reach that 15% target appears increasingly difficult in the present macro and industry backdrop.
Jefferies noted that valuation remains rich, and consensus earnings estimates may be too optimistic, adding to the case for caution.
