Tech Mahindra Share Price Target 2024: Shares Hit Upper Circuit Post Q4 Earnings ‘BUY, SELL Or HOLD’? Check Brokerage Recommendations (image source: Today Technology Market ResearchDigital)
Tech Mahindra Share Price Target: Tech Mahindra the IT giant stock on Friday hit the upper circuit after gaining 10 per cent in early trades around 9:30 AM. The Tech Mahindra share price has reached 1,309 per apiece. Despite the posting of the weakening financial results in the q4, the stock price has seen a good positive momentum should the investors ‘BUY, SELL or HOLD’? here is what the brokerage says.
Tech Mahindra Q4 Financial Performance
Tech Mahindra has reported a decline in its net profit for the March quarter of the fiscal year 2023-24, marking a 41 per cent year-on-year drop to Rs 661 crore.
The company’s revenue from operations during the reported quarter stood at Rs 12,871.30 crore, witnessing a decline of 6.2 per cent compared to the same period last year. Despite the company’s efforts, the financial performance for this quarter did not meet expectations, showcasing the persisting challenges in the IT sector.
For the full fiscal year ended March 31, 2024, Tech Mahindra’s profit after tax (PAT) stood at Rs 2,396.80 crore, a significant decrease from Rs 4,857 crore reported in the previous fiscal year. Similarly, the revenue for FY24 amounted to Rs 51,995.50 crore, lower than the Rs 53,290.20 crore reported in FY23. These figures underscore the tough market conditions and competitive pressures faced by the company throughout the year.
Tech Mahindra Dividend Announcement
In a move to reassure shareholders, Tech Mahindra has announced a final dividend of Rs 28 per share, in addition to the interim dividend of Rs 12 per equity share paid in November 2023. This brings the total dividend for FY 2023-24 to Rs 40 per equity share, a substantial 800 per cent on the par value of Rs 5 each.
As per the company’s filing on the NSE, “Recommended Final Dividend of Rs. 28/- per equity share of the face value of Rs. 5/- each (560 per cent) for the financial year ended 31st March 2024, subject to the Members’ approval at the forthcoming Annual General Meeting (“AGM”) of the Company. The Final Dividend, if approved, will be paid on or before, 9th August 2024. This dividend is in addition to Interim Dividend of Rs. 12/- per equity share paid by the Company in November 2023.”
Tech Mahindra Share Price Target 2024
JM Financial has given a ‘BUY’ rating for the IT stock setting Tech Mahindra’s share price target at Rs 1,403. ‘ we see value in the stock on FY27E EPS (20x multiple) and discount it at 12 per cent WACC to arrive at our TP. We upgraded the stock to BUY with a revised TP of INR 1,430 (from INR 1,320),’ The brokerage cited the following reasons.
Three-Year Turnaround Roadmap
Management unveiled a comprehensive three-year turnaround roadmap, outlining ambitious goals for FY27. The objectives include achieving above-peer-average growth, maintaining a 15 per cent EBIT margin, and achieving an ROCE of over 30 per cent.
Strategy Details
The strategy entails detailed plans for identified investment areas, organizational structure optimization, cost optimization opportunities, and a realistic timeline for implementation. Growth will be driven by top accounts, large multi-tower deals, and a focus on high-growth service areas.
Margin Expansion and Cost Savings
Margin expansion will be facilitated by targeted average cost savings of USD 250 million annually. Given the company’s current EBIT margin of approximately 6 per cent, these targets seem feasible and are essential for achieving the 15 per cent target EBIT margin.
Defined Deliverables and Organizational Structure
The strategy comes with well-defined deliverables and measurable metrics, with the organizational structure and key personnel already in place. While execution remains critical, the plan appears robust on paper.
Extended Timeline and Investor Confidence
The three-year plan reflects the board’s confidence in the management team, providing a longer runway for success. Investors should also consider this extended timeline, which enhances the probability of success.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. Today Technology Market ResearchDigital suggests its readers/audience to consult their financial advisors before making any money related decisions.)
