Tech Mahindra surges 9% on appointing Mohit Joshi as MD & CEO

Shares of Tech Mahindra surged 9 per cent to Rs 1,159.95 on the BSE in Monday’s intra-day trade after the company announced appointment of Mohit Joshi as Managing Director & Chief Executive Officer (CEO) of the company.

Mohit will take over as CEO & MD from CP Gurnani after his retirement on December 19, 2023. The joining date of Mohit is not mentioned in the press release. He is finishing his tenure at Infosys on June 9, 2023.

“Appointment of Mr. Mohit Joshi, for a period of 5 (five) years with effect from 20th December, 2023 to 19th December, 2028 (both days inclusive),” Tech Mahindra said in an exchange filing.

Mohit Joshi joins the company from Infosys, where he is currently the President. Mohit has over two decades of experience in the Enterprise technology software & consulting space and has worked with the largest corporations in the world in driving digital transformation and building thriving businesses.

At Infosys, Mohit is head of the Global Financial Services & Healthcare and the Software businesses, which includes Finacle (the banking platform) and the AI/Automation portfolio, Tech Mahindra said.

According to ICICI Securities, Mohit Joshi shall join well in advance for a smooth transition, which will be in line with Gurnani’s comments at the recently held analyst meet.

“We may see following Medium term benefits of Mohit joining Tech Mahindra’s BFSI vertical ($1 billion annual revenue, 16 per cent mix) has seen some sequential decline in last five quarters, it may likely to see some arrest there,” the brokerage firm said in its note.

It further stated, Tech Mahindra is looking at accelerated growth in their Healthcare & Life Sciences vertical (clubbed in ‘others’ vertical in disclosures and currently at just over $600 million annual revenue) as they are targeting this vertical to reach $1 billion revenue in the next two to three years and Mohit’s expertise there could help achieve the same.

The company is betting big on platform business ($450 million annual revenue) where it is looking to take it to $1 bn revenue in the next three years where his expertise in the platform business is likely to benefit. We believe there is scope of TechM's current valuation discount of 40- 50 per cent to Infy/ TCS to narrow in the future but we believe that will only happen in a gradual manner (as in when acceleration visible in their numbers) and we do not see that as an immediate possibility, ICICI Securities said in a note.

Motilal Oswal Financial Services (MOFSL) believes that this is a positive for Tech Mahindra as it will help the company scale up its BFSI vertical, which has lagged peers in recent years. Moreover, Mohit is generally regarded well in the industry and can help refresh the company’s goto-market approach, which has lagged its peers too.

“On the other hand, we will keenly monitor any leadership attrition at the company, which can have a near-term adverse impact on its business. Moreover, we expect growth and margins to remain under pressure in the near term at Tech Mahindra. We would watch for clarity on a turnaround. We reiterate our NEUTRAL rating on the stock,” MOFSL said in sector update.

However, despite of today’s run-up, Tech Mahindra in past one year has underperformed the market by falling 22 per cent, as compared to 7 per cent rally in the S&P BSE Sensex.

Meanwhile, Infosys has declined 1.5 per cent to Rs 1,450 today.

Technical View

Bias: Neutral

Support: Rs 1,100; Rs 1,055

Resistance: Rs 1,150

After a three-week fall, the stock has bounced back and is seen testing resistance around its trend line on the weekly chart at Rs 1,152. The stock needs to clear this hurdle for a further rally towards Rs 1,225.

On the flip side, in case, the stock is unable to conquer this hurdle. The stock could slip back towards its 20-WMA (Weekly Moving Average) at Rs 1,055-odd level. In the interim, the stock may seek support around the 20-DMA at Rs 1,100.

(With inputs from Rex Cano)