Tech Mahindra Shares Dip Despite Strong Q2 Performance as Analysts Remain Divided

Tech Mahindra , a leading Indian IT services company, saw its shares decline by 0.90% to ₹1,455.00 despite reporting better-than-expected operating results for the second quarter. The company's performance has sparked mixed reactions from analysts, with some maintaining positive outlooks while others express caution.

Q2 Performance Highlights

Tech Mahindra delivered a strong quarterly performance, surpassing market expectations:

Metric	Result	Notes
Constant Currency Revenue Growth	1.60%	Exceeded expectations of 1%
Growth Trend	Strongest in 10 quarters
Revenue	Exceeded estimates
Margins	Exceeded estimates

The company has maintained its guidance for fiscal year 2027, projecting growth above the industry average and targeting an operating margin of around 15.00%.

Analyst Perspectives

The Q2 results have elicited diverse opinions from market analysts:

Firm	Rating	Target Price	Key Points
CLSA	High Conviction Outperform	₹1,695.00	Maintained rating but reduced target price due to uncertainty around FY27 outperformance goals
Jefferies	Underperform	₹1,270.00	Noted profits missed estimates due to forex losses; cautioned about H-1B visa costs impacting margin target
Morgan Stanley	Underweight	₹1,555.00	Highlighted strong deal wins but flagged slow deal-to-revenue conversion and manufacturing vertical weakness
Nomura	Buy	₹1,670.00	Cited healthy deal wins and steady progress in three-year turnaround plan

Market Performance

Tech Mahindra's stock has experienced a significant decline:

Year-to-date decline: Nearly 14.00%
Current valuation: 18.30 times FY27 forward earnings

The mixed analyst opinions reflect the complex landscape Tech Mahindra is navigating. While the company has shown strong operational performance and deal wins, concerns persist about long-term growth sustainability and potential challenges in achieving margin targets.

Investors and market watchers will likely keep a close eye on Tech Mahindra's ability to convert deal wins into revenue and its progress towards meeting FY27 goals. The company's performance in the manufacturing vertical and its management of foreign exchange impacts will also be key areas of focus in the coming quarters.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+1.08%	+2.06%	-0.94%	+32.17%	+10.82%	+466.53%

Mahindra & Mahindra , a leading Indian IT services company, has released its quarterly results, showcasing a mixed performance. The company reported a decline in net profit but an increase in revenue for the quarter.

Financial Performance

Metric	Q2 FY2024	Q2 FY2023	YoY Change
Net Profit	₹1,194.00 crore	₹1,250.00 crore	-4.4%
Revenue from Operations	₹13,995.00 crore	₹13,313.00 crore	+5.1%

Mahindra & Mahindra's net profit for the quarter declined by 4.4% year-over-year, falling to ₹1,194.00 crore from ₹1,250.00 crore in the same period last year. However, the company's revenue from operations showed positive growth, increasing by 5.1% to reach ₹13,995.00 crore, up from ₹13,313.00 crore in the corresponding quarter of the previous financial year.

Dividend Announcement

In a move that may interest shareholders, Mahindra & Mahindra has declared an interim dividend:

Dividend Amount: ₹15.00 per equity share
Record Date: October 21

Shareholders on record as of October 21 will be eligible to receive this interim dividend.

Analysis

The mixed results reflect the current challenges and opportunities in the IT services sector. While Mahindra & Mahindra has managed to grow its revenue, indicating a healthy demand for its services, the decline in net profit suggests potential pressure on margins or increased operational costs.

The company's decision to declare an interim dividend despite the profit decline may be seen as a signal of confidence in its financial stability and a commitment to delivering value to shareholders.

Investors and market analysts will likely be watching closely to see how Mahindra & Mahindra navigates the evolving IT landscape and manages to balance growth with profitability in the coming quarters.