Tech Mahindra Ltd shares jumped 4.34 per cent in Monday's trade to hit a one-year high value of Rs 1,761.30 on the back of strong second quarter (Q2 FY25) earnings. The stock was last seen trading 0.62 per cent up at Rs 1,698.45. At this price, it has climbed 30.84 per cent on a year-to-date (YTD) basis.
The IT services firm reported a 153.1 per cent year-on-year (YoY) jump in its consolidated net profit at Rs 1,250 crore. Its revenue moved up 3.5 per cent YoY to Rs 13,313 crore. During the quarter, the company's PAT margin stood at 9.4 per cent, up 560 bps YoY. New deal wins TCV stood at $603 million.
TechM's revenue from the communications vertical dropped 1.7 per cent YoY while BFSI recorded a YoY growth of 4.5 per cent. Revenues from the technology, media and entertainment vertical rose 2.4 per cent. Communications continued to be slow with a decline of 1.7 per cent YoY.
The Mahindra Group company also declared an interim dividend of Rs 15 per equity share and fixed November 1 as the record date for determining eligibility of shareholders.
Axis Securities has given a 'Buy' call on TechM with a revised target price of Rs 1,850 per share from Rs 1,685 earlier. "Total Contract Value (TCV) remained strong in Q1FY25, amounting to $603 million, driven primarily by significant deal wins in the Communication and Enterprise segments. Management is confident of gaining medium-term demand momentum, supported by deals secured in previous quarters. Additionally, margin improvements are expected going forward," it stated.
"Margins have likely bottomed out and are expected to improve over the next couple of quarters. In terms of demand, some early signs of recovery are visible, indicating potential for a near-term pickup," the brokerage mentioned.
"We assign a 26x P/E multiple to the company's FY26E earnings of Rs 71/share, arriving at a target price of Rs 1,850. Therefore, we recommend a 'Buy' on the stock," Axis Securities also stated.
From a long-term perspective, the brokerage said TechM appears to be effectively addressing client-specific engagement issues across multiple verticals while maintaining a strong deal pipeline. "The company believes that its new strategy will support a quicker recovery, enhancing confidence in near-term growth," it added.