HDFC Securities has maintained its 'Add' rating on Tech Mahindra Ltd. shares while setting a target price of ₹1,500, implying moderate upside from current levels. According to the brokerage's research report, the positive outlook is supported by improving growth visibility, strong deal wins, and continued margin expansion, even as it trimmed earnings estimates. The stock currently trades at a premium valuation of approximately 19x FY27E P/E compared to peers, which may cap upside in the near term.
Tech Mahindra closed FY26 with revenue of $6.38 billion, supported by record deal wins of $3.79 billion TCV, up 42% YoY, signaling a strong demand pipeline. The company reported its 10th consecutive quarter of Ebit margin expansion, reaching 13.8%, reflecting steady operational improvement. The growth ramp is anchored by a strong deal pipeline and recent mega-deal wins, including the global partnership with Orange Business, which are expected to scale up through FY27E.
While industry-wide growth is pegged at 2-4%, Tech Mahindra expects to outperform, supported by manufacturing momentum (+11.8% YoY in Q4), steady BFSI and retail verticals, and a revival in telecom (its largest vertical), led by recent deal wins. The achievement of FY27E targets hinges on the scheduled ramp-up of already-signed large deals, conversion of the BFSI/manufacturing pipeline into bookings, and execution discipline amid a still-uncertain macro backdrop.
On margins, the playbook shifts from the cost-efficiency-led gains that drove the FY26 trajectory to a higher mix of fixed-price contracts, AI-led delivery, and scaling of human-plus-agent pricing models in FY27E. However, key risks include delays in large deal ramp-ups, weakness in hi-tech and healthcare verticals, and macro uncertainties such as tariffs and geopolitical factors that could impact the company's growth trajectory.
