TechM shares jump after 'all-around beat' in Q3 show; check stock outlook

TechM's new deal wins for the quarter came in at $1.1 billion, up 47 per cent from $745 million last year. On a sequential basis, TCV was up 34 per cent.

Shares of Indian technology major Tech Mahindra Ltd. rose nearly 4 per cent on Monday after it delivered a "all-around beat" in its earnings for the third quarter of the current financial year (Q3-FY26), along with "robust" deal wins.

 

The tech major's stock rose as much as 3.8 per cent during the day to ₹1,734.9  per share. The stock pared gains to trade 3.5 per cent higher at ₹1,730 apiece, compared to a 0.52 per cent advance in Nifty 50 as of 9:32 AM. 

 

Shares of the company rose for the second straight session and currently trade at 16 times the average 30-day trading volume, according to Bloomberg. Tech Mahindra Share price has risen 8.4 per cent this year, compared to a 2.15 per cent decline in the benchmark Nifty 50. TechM has a total market capitalisation of ₹1.7 trillion. 

 

Tech Mahindra Q3 results 

The company posted a net profit of ₹1,122 crore for Q3FY26, up 14 per cent from the corresponding period of ₹932 crore. On a sequential basis, net profit or profit after tax (PAT) was down 6 per cent. 

 

The dip in the net profit came due to the impact of the new labour codes. It saw an impact of ₹272.4 crore from the new labour codes during the quarter. Revenue for the quarter grew 8.3 per cent to ₹14,393 crore. On a quarter-on-quarter (Q-o-Q) basis, revenue was up 2.8 per cent. 

 

Growth for the third quarter was driven by manufacturing, retail, logistics, transport and communications, which grew 11.7 per cent, 11.7 per cent and 4.7 per cent year-on-year (Y-o-Y), respectively.

 

New deal wins for the quarter came in at $1.1 billion, up 47 per cent from $745 million last year. On a sequential basis, TCV was up 34 per cent.  ALSO READ | Wipro down 9% as fall in Q3 profit, muted guidance keep brokerages cautious

Analysts on TechM earnings

Tech Mahindra delivered an all-round beat in the third quarter, aided by services growth, seasonality and execution of a large European auto deal, Emkay Global said. Operating margin expanded about 100 basis points quarter-on-quarter to 13.1 per cent, the ninth straight quarter of improvement, driven by Project Fortius efficiencies, it said. 

 

However, Emkay cut FY26 earnings per share estimates by 5.4 per cent and retained a 'Reduce' rating, citing rich valuations and maintained a target price of ₹1,600 per share.

 

Antique Stock Broking noted that Tech Mahindra delivered a strong quarter with a beat across all parameters, while its margin trajectory continues to trend upward. The company remains on track to achieve its 15 per cent Ebit margin target by FY27 and expects growth to remain above the peer average. 

 

Based on the strong earnings beat and a slightly higher margin assumption, Antique has raised its FY27 and FY28 earnings per share estimates by 3 per cent and 2 per cent, respectively.

 

Analysts at Nomura said Tech Mahindra has made good progress at the midpoint of its three-year turnaround journey, supported by strong deal wins and a healthy pipeline. The company is targeting better-than-peer growth in FY27, it noted. 

 

Factoring in the Q3FY26 performance and higher revenue and margin assumptions for FY27-28, Nomura tweaked EPS estimates by about 3 per cent and marginally raised the target price to ₹1,810 from ₹1,750.  ==========

 

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