Tech Mahindra’s (TEML.NS) shares surged by 13.2% on Friday, marking their most significant intraday increase in nearly eight years. This spike followed the announcement of a turnaround plan by India’s fifth-largest IT company, offering reassurance amid declining revenue growth over the past three quarters.
As of 11:48 a.m. IST, the stock was up 8.6% at 1,292.25 rupees, leading gains on the Nifty IT index (.NIFTYIT), which rose by 1.8%. Year-to-date, Tech Mahindra has climbed 2%, in contrast to the 4% decline in the IT index. Meanwhile, larger competitors Infosys (INFY.NS) dropped by 6.8%, and Tata Consultancy Services (TCS.NS) rose by 2.2%.
Tech Mahindra, headquartered in Pune, unveiled a three-year plan aimed at boosting revenue and doubling operating margin to 15% by fiscal 2027. The company experienced a revenue decline ranging from 2% to 6.2% in rupee terms over the past three quarters, including the March quarter.
Brokerages responded positively to the turnaround plan, with HSBC stating, “The new transformation plan appears sensible, acknowledging the necessity for investment in sales and cost management to expand margins. Nevertheless, achieving this turnaround will likely pose challenges in the current environment.”
Concerns lingered regarding execution, with Jefferies noting, “While management’s plan is comprehensive, its execution amidst a weak demand environment carries risk.”
Tata Consultancy Services (TCS.NS) missed revenue estimates, although it expressed confidence in a robust deal pipeline driving growth this fiscal year.
Following the results, at least 13 analysts lowered their target price for Tech Mahindra, while two raised theirs. The median price target decreased to 1,289.50 rupees from 1,320.50 rupees in March, according to LSEG estimates.
