tech mahindra

What should investors do after Tech Mahindra’s fourth-quarter results report: buy, sell, or hold?

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The share price of Tech Mahindra fell in early trade on May 16 after the business posted stronger figures for the quarter ending March 2022.

Tech Mahindra announced a 10% sequential increase in its overall net profit to Rs 1,506 crore for the quarter ended March 2022, exceeding analysts’ projections of Rs 1,411 crore on May 13.

For the reported quarter, the IT services major recorded a 5.8 percent quarter-on-quarter increase in consolidated revenue from operations to Rs 12,116 crore.

The company’s board of directors has also recommended a final dividend of Rs 15 per share for the fiscal year ending March 31, 2022.

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Here’s what brokerages think about the stock and the company’s March quarter earnings:

Morgan Stanley & Co.

Morgan Stanley has maintained its overweight rating on the stock while lowering its target price to Rs 1,650 per share from Rs 1,800.

Morgan Stanley stated that the company’s attractive valuation keeps it as its top pick in the IT group.

CNBC-TV18 said that there is a strong broad-based revenue growth projection and that there are levers in place to alleviate cost headwinds until FY23.

Citi

Citi has maintained its buy recommendation on the stock but reduced its target price to Rs 1,400 per share from Rs 1,715 per share.

Given the macro overhang, it lowers FY23/24 EPS expectations by 5%/2% and reduces target multiple to 20x from 24x, according to CNBC-TV18.

Macquarie

Macquarie maintains an outperform rating on the company, with a target price of Rs 1,710 per share.

The margin shortfall was mostly due to significant recruiting, with direct costs rising by 2.2 percent in rupee terms.

According to CNBC-TV18, the company expects a near-term increase in revenue from synergy gains from M&A.

UBS

UBS maintains a sell rating on the company with a target price of Rs 1,260 per share, citing in-line Q4 revenue while margins fall short of expectations.

Pricing, according to management, will have a lag effect. According to CNBC-TV18, the pipeline for enterprises and telecom industries remains solid.

Goldman Sachs & Co.

The brokerage company has maintained a neutral rating on the stock, with a target price of Rs 1,429 per share.

The lower-than-expected EBIT reflects a lack of pricing power.

CNBC-TV18 reported that Goldman Sachs lowered FY23-26 EPS predictions by up to 2%.

JPMorgan

The research group has maintained an overweight rating on Tech Mahindra and reduced the target price to Rs 1,650 per share from Rs 1,800.

There was excellent growth and transaction momentum, but margins were crimped and values were undemanding.

According to CNBC-TV18, a research firm reduced its revenue forecast for FY23/24 by 1%, and margins may be under pressure in FY23.

Tech Mahindra was trading at Rs 1,198.00 on the BSE at 09:18 hours, down Rs 4.30, or 0.36 percent.

Disclaimer: The opinions and investment suggestions offered by Moneycontrol.com financial gurus are their own, not those of the website or its administration. Before making any investment decisions, Moneycontrol.com recommends that customers consult with professional experts.

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