Tech Mahindra Ltd shares traded with sharp gains in Friday's deals. The stock jumped 13.01 per cent to hit a high of Rs 1,344.95. It was last seen trading 8.99 per cent higher at Rs 1,297.05.
Today's sharp rise in the share price came despite the IT company's weak fourth-quarter (Q4 FY24) results. TechM reported a 41 per cent fall in profit for the quarter ended March 2024. Net profit slipped to Rs 664.2 crore in Q4 FY24 against Rs 1,125 crore in the year-ago period.
Consolidated revenue slipped 6.2 per cent year-on-year (YoY) to Rs 12,871 crore in the March quarter.
Technical analysts said immediate support on the counter will be at Rs 1,300-1,290 levels.
"A decisive close above Rs 1,300 level can trigger the stock towards the Rs 1,350-1,400 zone. Keep a strict stop loss placed at Rs 1,240," Ratnesh Goyal, Head of Technical Analysis at Arihant Capital, told Business Today TV.
"TechM's stock could face resistance near Rs 1,340. Immediate support will be at Rs 1,290," said Kiran Jani, Head of Technical Research at Jainam Broking.
Brokerage views
"Given the demand within communications remained weak and unstable, we believe the company's laid out strategy to drive balanced portfolio mix with reduced dependency on communications is a positive. However, the cyclicality of its portfolio business and weakness across its business units seem to be challenging, hence we would wait for early sign of recovery before we turn positive on the name," Prabhudas Lilladher (PL) said.
Domestic brokerage PL has given a 'Hold' rating with a downward target price of Rs 1,135. "The stock is currently trading at 20x FY26e, we are assigning P/E of 19x to FY26e with a target price of Rs 1,135. With that we assume coverage on TechM with a 'HOLD' rating," it stated.
Nuvama Institutional Equities said, "The (company's) new CEO, Mohit Joshi, laid out his FY27 strategy to take TechM ahead of peers' average growth and to a 15 per cent EBIT margin. While these targets are achievable, we argue the steps needed to achieve them will incur significant near-term pain. We are trimming FY25E/26E by -2 per cent/-1.5 per cent."
"While we welcome the vision and strategy of the new CEO, we believe the same will be quite challenging. Growth will be difficult with telecom still forming 36 per cnet of revenue while margins are likely to face headwinds (of building bench strength, investing in growth, etc) before tailwinds. We continue to expect near-term pain. Maintain 'Reduce'," Nuvama further stated.
The brokerage has assigned a 12-month target price of Rs 1,000 for TechM shares, down 25.65 per cent from today's high level of Rs 1,344.95.