Citi has reiterated its ‘Sell’ rating on Tech Mahindra, citing concerns around slower revenue performance, elevated expectations, and macro headwinds. In Q4FY25, the company reported net profit of ₹1,166.7 crore, up 18.7% QoQ, and revenue of ₹13,384 crore, up only 0.7% sequentially. EBITDA grew 2.1% QoQ to ₹1,378 crore, with margins steady at 10.3%.
While deal momentum remains robust — with TTM total contract value (TCV) up 43% YoY — Citi noted that this growth comes off a low base in FY24 and still falls short of FY22–23 levels. Moreover, the IT services headcount has remained flattish YoY, suggesting caution in scaling up.
Management commentary also reflected macro uncertainty in key verticals such as automotive and hi-tech, which could hamper the pace of recovery. Citi warned that while execution has improved, expectations may be running ahead of fundamentals, particularly as consensus EPS estimates have already been revised down by 7% since May 2024.
Citi maintained its ‘Sell’ rating and target price of ₹1,265, citing elevated valuations and the difficulty of delivering a full turnaround in the current environment.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please consult a certified financial advisor before making investment decisions.
