Citi has maintained its ‘Sell’ rating on Tech Mahindra with a target price of ₹1,400, expressing concern over a weak revenue profile and limited visibility on margin improvement.
In its Q1FY26 result, Tech Mahindra’s revenue fell 1.4% in constant currency, and the services segment saw a 7.6% QoQ drop. Gross margins were down 50 bps QoQ, even as the company managed to maintain EBIT margins at 11.1%.
Citi highlighted flat headcount growth and a moderate TCV of $809 million, calling the demand environment “mixed.” The company cited softness in manufacturing and high-tech, while financial services and telecom remained steady.
The brokerage is skeptical about Tech Mahindra’s ability to deliver 12.5% EBIT margins for FY26, noting that achieving such targets would require 90–100 basis points of margin expansion every quarter for the remainder of the fiscal.
Despite management’s efforts and positive commentary, Citi believes current valuations do not reflect the underlying operational risks, justifying its bearish stance.
