Tech Mahindra’s first quarter performance for FY26 has triggered a range of responses from brokerages, with some optimistic about its strategic pivot and deal wins, while others remain cautious about valuation and execution risks. The company reported a mixed set of results, with strong order momentum and stable margins offsetting softer revenue performance.
CLSA has maintained a ‘High Conviction Outperform’ rating on the stock with a target price of ₹2,020. The brokerage said Tech Mahindra delivered an in-line quarter at the EBIT level, where slightly slower revenue growth was balanced by better margins and strong order-booking. CLSA believes the company’s growth journey will begin in the next quarter with the ramp-up of recently won large deals. Its focus remains on expanding top accounts, adding ‘must-have’ clients, and pursuing large profitable contracts.
HSBC has also maintained a ‘Buy’ rating, with a target of ₹1,900. According to HSBC, the company’s EBIT margin at around 11 percent and its strong deal wins are aligned with its FY27 strategic plan. The brokerage expects Tech Mahindra’s growth in FY27 to be above the peer average but noted that delays in margin expansion remain a downside risk.
Nomura has reiterated its ‘Buy’ call with a target of ₹1,810. It called the Q1 performance a mixed bag, citing strong deal wins and a healthy pipeline but muted revenue growth. Nomura expects FY26 to deliver better revenue growth than FY25 and has marginally revised its FY26–27 EPS forecasts upward by 1–2 percent.
On the other end of the spectrum, Jefferies has maintained an ‘Underperform’ rating with a target of ₹1,400. It noted that while profits beat estimates due to higher other income, revenue fell short. The firm expressed concern over Tech Mahindra’s plan to reach 15 percent margins by FY27, which would require quarterly improvements of 75 basis points over the next seven quarters. Jefferies remains cautious due to rich valuations and what it considers to be overly optimistic consensus expectations.
Citi has also issued a ‘Sell’ rating with a target of ₹1,400. The brokerage observed that revenue declined 1.4 percent quarter-on-quarter in constant currency terms and that margins were supported by lower other expenses. It expects revenue to remain largely flat year-on-year in FY26 and praised management’s efforts in a challenging macro environment.
Morgan Stanley has retained an ‘Underweight’ stance with a target price of ₹1,555. It acknowledged strong deal wins and improving client metrics, but highlighted weak deal-to-revenue conversion and pressure in manufacturing verticals as key concerns. Morgan Stanley believes the outlook remains challenging as balancing growth and margins will be difficult.
The stock remains under close watch as it enters a phase of transition, with large deal ramp-ups expected to support growth from the second quarter onward. However, divergent views from brokerages reflect the fine balance the company must strike between execution, profitability, and valuation.
Disclaimer: This article is based on brokerage reports and publicly available information. It does not constitute investment advice. Readers are advised to consult a certified financial advisor before making any investment decisions.
