TechM Q1 results: What to do with this IT stock post June quarter earnings?

Tech Mahindra Ltd reported a weak set of operating performance for the June quarter, with revenue declining 1.4 per cent QoQ in constant currency (CC) terms, owing to continued weak discretionary tech spending and delay in deal ramp ups. Analysts tracking the IT firm said weakness in automotive, hi-tech, and manufacturing verticals continued, as clients scaled back discretionary spending, impacted by macro uncertainties and tariff-related
pressures. That said, telecom stabilized and demand in the US BFSI market remained resilient. Net-net, analysts largely suggested a 'Hold' or 'Reduce' on the stock.

TechM has been delivering on deal-wins, but margins, while expanding, are still far from its guidance, Nuvama explained.  This brokerage believes margin expansion will be even more difficult hereafter given the low-growth and weak macros and limited levers for expansion. 

"Despite inferior margins and returns profile, TechM trades at a valuation comparable to large-cap peers. We are trimming FY26E/27E (

Antique Stock Broking said the deal wins at $809 million for the quarter was against an average of $570 million reported in the last eight quarters. EBIT margin expanded sequentially by 60 basis points QoQ to 11.1 per cent, in line with itsexpectation. 

"Management reiterated their commitment to reaching 15 per cent EBIT margin by FY27 with continued focus on profitable growth and operational rigor. Further, they continue to expect FY26 to be better than FY25 with close to industry average growth. Overall, we believe TechM’s strong bookings, enterprise resilience, and strategic restructuring efforts suggest potential recovery in 2HFY26," Antique said.

This brokerage suggested 'HOLD' and a target of Rs 1,725 on the stock. 

Following the Wipro Q1 results, Centrum Broking rolled over its estimates to September 2027 estimates and maintain 'ADD' rating on the stock with revised target price of Rs 1,821 against Rs 1,604 earlier, as it increased the target multiple from 20x to 22x on the account of consistent margin improvement trajectory. 

MOFSL said the ongoing restructuring under the new leadership is tracking well, and this quarter was another step in the right direction. It continued to like TechM bottom-up turnaround story.

"We value TECHM at 25x FY27E EPS with a target price of Rs 2,000 (24% upside). We reiterate our Buy rating on the stock," the brokerage said.

The the Mahindra Group firm had on Wednesday clocked a 34 per cent YoY jump in Q1 net profit at Rs 1,140.60 crore on a 2.7 per cent YoY rise in sales at Rs 13,351 crore. Ebit for the quarter stood at Rs 1,477 crore, up 34 per cent YoY.