Tech Mahindra has set ambitious growth targets for FY27, positioning itself to achieve faster expansion than its industry peers while targeting a 15% EBIT (Earnings Before Interest and Tax) margin. The IT services company's strategic roadmap reflects confidence in its operational capabilities and market positioning across multiple sectors and regions.

Growth Strategy and Financial Targets

The company's FY27 objectives center around outpacing competitor growth rates while maintaining strong profitability metrics. The targeted 15% EBIT margin represents a significant milestone in the company's financial performance goals.

Sector-Specific Performance Outlook

Tech Mahindra anticipates varied performance across its key verticals. The Banking, Financial Services and Insurance (BFSI) vertical is expected to show steady growth as seasonal factors that previously impacted performance begin to stabilize. This sector represents a crucial component of the company's revenue portfolio and growth strategy.

The Communications sector is specifically targeting growth momentum by 2027, indicating the company's strategic focus on telecommunications and related services. Meanwhile, the High-Tech industry segment faces anticipated volatility amid continuing cost pressures and cautious IT spending patterns from clients.

Regional Growth Expectations

Europe represents a key growth market for Tech Mahindra, with the region set to transition from stability to growth phase. This transition is supported by a major deal that is expected to drive revenue expansion in the European market.

Strategic Positioning

The company's growth aspirations demonstrate its commitment to strengthening market position within the competitive IT services landscape. By targeting performance metrics that exceed peer benchmarks across multiple sectors, Tech Mahindra aims to differentiate itself through superior operational execution and client delivery capabilities while navigating sector-specific challenges and opportunities.

Tech Mahindra shares surged nearly 4% following the company's Q3 results announcement, which revealed strong sequential performance and record deal momentum. The IT services company reported better-than-expected revenue growth and significant margin expansion, prompting positive analyst reactions including a major upgrade from JPMorgan.

Share Price Performance

Tech Mahindra shares climbed 3.57% to ₹1,730.10, trading close to their 52-week high after the quarterly results announcement. The stock has gained close to 8% so far this year, with the rally driven by investor optimism over improved financial metrics and enhanced business outlook under CEO Mohit Joshi's leadership.

Financial Performance Overview

The company delivered robust performance in Q3, with revenue growth significantly outpacing estimates and margins showing sharp sequential improvement.

Revenue grew 1.7% in constant currency terms, comfortably beating analyst estimates of 0.6%. The EBIT margin improvement to 13.1% from 12.1% marked the ninth consecutive quarter of margin expansion, representing a sharp recovery from the low of 4.7% seen in Q2FY24.

Record Deal Momentum

Tech Mahindra achieved record deal wins during the quarter, with management highlighting that deal wins on a last-twelve-month basis were the highest achieved in the past five years. Total contract value reached $1,096 million, including a significant $500 million deal win in Europe within the communications vertical. The telecom segment, accounting for approximately 35% of total revenue, posted year-on-year growth of 4.6% in dollar terms, breaking a trend of contraction seen in nine of the last 10 quarters.

Analyst Upgrades and Target Revisions

JPMorgan upgraded Tech Mahindra to 'Overweight' from 'Neutral', raising its price target to ₹2,100 per share. The brokerage expects the company to post a relatively strong exit growth rate of 1.9%, which combined with mega deal ramp-ups, could help it match HCL Technologies and Infosys with around 6% growth in FY27E.

Following the improved outlook, JPMorgan raised its revenue estimates by 2-3% and margins by 30-70 basis points, resulting in EPS upgrades of 3-8% over FY26-28E. The brokerage also increased its target valuation multiple to 24x from 20x, citing stronger and more sustainable growth prospects.

Business Outlook

Management reiterated its aspiration to reach 15% EBIT margins by FY27, alongside industry-leading growth. The communications vertical showed signs of recovery, with analysts expecting the company's growth trajectory to provide incremental operating leverage supporting the margin target. The turnaround is expected to be supported by rising AI-led spending and enhanced deal conversion capabilities.