Morgan Stanley has reiterated an ‘Equal-weight’ rating on Tech Mahindra, raising its target price to ₹1,550, while expressing caution on the ambitious nature of the company’s FY27 goals.
In Q4FY25, Tech Mahindra posted net profit of ₹1,166.7 crore, up 18.7% QoQ, on revenue of ₹13,384 crore, a modest 0.7% QoQ rise. EBITDA increased 2.1% QoQ to ₹1,378 crore, and margins edged up to 10.3%. The company also announced a final dividend of ₹30 per share.
Tech Mahindra reiterated its FY27 strategic goals, including:
a) Revenue growth ahead of peer average
b) EBIT margins of 15%
c) Return on capital employed (ROCE) of 30%
d) 85% free cash flow payout to shareholders
Morgan Stanley appreciated the direction and commitment to value creation but noted that achieving these targets looks challenging in the context of a weak macro backdrop, particularly in discretionary tech spending across industries.
The brokerage sees reasonable progress in execution, but with valuations and expectations catching up, it prefers to stay neutral in the near term.
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.
