Anand Rathi Maintains BUY Rating on Tech Mahindra with Target Price of ₹1,964
Anand Rathi maintains BUY rating on Tech Mahindra with ₹1,964 target price, citing strong Q3FY26 results including 1.7% quarterly revenue growth and EBIT margin expansion to 13.1%. The company secured a $500 million European telecom deal and achieved over $1 billion in quarterly TCV. The brokerage expects growth from telecom, BFSI, manufacturing, and retail segments, noting that Tech Mahindra has addressed previous growth concerns with exceptional performance.
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Anand Rathi has reaffirmed its positive outlook on Tech Mahindra, maintaining a BUY rating with a target price of ₹1,964. The brokerage firm highlighted the company's robust performance in Q3FY26, despite it being a traditionally challenging furlough quarter for the IT services sector.
Strong Financial Performance in Q3FY26
Tech Mahindra delivered impressive results across key financial metrics during the quarter. The company's performance demonstrates resilience and operational efficiency in a competitive market environment.
| Metric | Q3FY26 Performance | Growth |
|---|---|---|
| Revenue Growth (CC) | - | 1.7% q/q |
| EBIT Margin | 13.1% | +100 bps q/q |
| Total Contract Value | >$1 billion | Quarterly milestone |
| LTM TCV | ~$3.5 billion | ~48% y/y |
Business Segment Performance
The company's diversified business portfolio showed varied performance across segments. IT services maintained steady growth momentum, while the BPO division benefited from seasonal factors.
Segment-wise Growth Analysis
| Business Segment | Q3FY26 Growth | Key Drivers |
|---|---|---|
| IT Services | 1.3% q/q | Core business stability |
| BPO Services | 2.7% q/q | Retail segment seasonality |
Major Contract Wins and Future Pipeline
A significant highlight of the quarter was Tech Mahindra securing a substantial European telecom modernization contract. This deal represents a major validation of the company's capabilities in the telecom sector.
| Contract Details | Specifications |
|---|---|
| Contract Value | $500 million |
| Duration | 5 years |
| Sector | European telecom modernization |
| Ramp-up Timeline | From Q1FY27 |
Growth Outlook and Strategic Focus
Anand Rathi expects multiple sectors to contribute to Tech Mahindra's future growth trajectory. The research firm identified key areas where the company's expertise positions it well for sustained expansion:
- Telecom sector: Leveraging expertise across the telecom value chain, including networks, software through Comviva, and BPS business
- BFSI segment: Expected to provide meaningful contribution to growth
- Manufacturing: Anticipated to drive business expansion
- Retail sector: Positioned for continued growth contribution
Investment Recommendation
The brokerage firm's target price of ₹1,964 implies an expected P/E ratio of 23.6x for FY28. Anand Rathi noted that Tech Mahindra has effectively addressed previous market concerns about its growth prospects through exceptional performance across growth, margin, and TCV metrics in Q3FY26.
The research report emphasized that the company's performance in the quarter demonstrates its ability to deliver consistent results even during traditionally challenging periods, reinforcing confidence in its operational capabilities and strategic direction.
Historical Stock Returns for Mahindra & Mahindra
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.02% | -0.54% | +1.01% | +14.42% | +22.71% | +352.09% |
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