Tech Mahindra shares fall 4% post Q2 earnings. Should you buy, sell or hold?
Tech Mahindra shares plunged nearly 4% on Thursday to hit the day's low of Rs 1,098.15 on the NSE after a clutch of brokerages retained their adverse ratings on the stock and slashed their targets following the September quarter earnings posted by the company on Wednesday.
Among foreign brokerages, Jefferies maintained an underperform view. In the domestic pack, Kotak Institutional Equities and Nuvama recommended a reduce stance on the counter while Motilal Oswal suggested a Neutral call.
Though Japanese brokerage firm Nomura reiterated its buy view, it cut the price target in its post earnings review of the stock.
IT services company Tech Mahindra posted a consolidated net profit of Rs 494 crore in the second quarter, down about 62% from Rs 1,285 crore reported in the same quarter of last year.
The profit was below the ET Now Poll estimate of Rs 670 crore. Revenue from operations declined 2% year-on-year (YoY) to Rs 12,864 crore in the reporting quarter against Rs 13,129 crore in the year-ago period.
Here is what brokerages recommended:
Jefferies: Underperform | Target: Rs 910
Jefferies has maintained an underperform stance on Tech Mahindra shares though it has marginally increased the target price to Rs 910 from Rs 900.
The Q2FY24 results missed its estimates as weakness in communications was a key drag. The growth outlook remains muted.
However, the brokerage sees margins to expand from current levels. Jefferies cuts the FY24-26 earnings estimates by 9-28% on lower growth and margins.
Kotak Equities: Reduce | Target: Rs 1,210
Kotak values the stock at an unchanged 17X multiple, leading to an future value of Rs 1,150 from an earlier target of Rs 1,210 as it maintained a 'Reduce' rating on the counter.
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