Tech Mahindra Limited

Technology — Information Technology Services · NSE

₹1,790.00+₹140.00 (+8.48%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by high debt relative to equity.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Tech Mahindra Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Tech Mahindra Limited provides information technology services and solutions in India, the Americas, Europe, and internationally.

IndustryInformation Technology Services

SectorTechnology

Employees1,52,206

Annual revenue₹56,815 Cr

How does it make money?

Turns over ₹56,815 Cr a year. Of every ₹100 of sales, about ₹8 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 1,52,206 employees supports ₹37.3 lakh of revenue a year, the signature of a people-led business.

EBITDA margin16.1%

Net margin8.5%

Revenue / employee₹37.3 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Some evidence

ROCE of 19.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE19.8%

ROE19.2%

Peer median ROE32.0%

What is the outlook?

35 analysts covering the stock expect revenue to grow about 6.2% and earnings to grow about 16.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+6.2%

Est. earnings growth+16.5%

Analysts35

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +7% while net margin moved -7% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+7%

Margin effect-7%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.2% — barely ahead of inflation
✗ Profit has declined at 0.1% a year

Quality vs. Valuation

Company Quality

57/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

52/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

28.8x

3Y Median

30.9x

40 monthly readings · mean 37.4x · range 20.8x–64.4x

Sector Median

16.5x

median of 4 sector peers

🟡Currently trading close to its 3y median of 30.9x — the market is paying about what it usually pays for this company.

⚠️Against its sector it trades 74% above the peer median of 16.5x.

vs. its own history

Fair

30.9x median over 40 months · -7%

vs. sector peers

Expensive

16.5x median of 4 peers · +74%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

28.8x

P/B

5.34x

EV/EBITDA

17.0x

PEG

0.89

Dividend Yield

2.85%

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 20% over 3 years.
Cash generation is improving
Free cash flow is up 20% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Inventory building faster than sales
Inventory is up 342% against revenue growth of 7% — stock may not be moving.

Red Flags

2 items require attention · 2 high

🔴High leverageFinancial
Debt/Equity of 7.25x — earnings must service borrowings before shareholders see anything.
🔴Inventory building faster than salesFinancial
Inventory up 342% against revenue up 7% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.8% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Deleveraging frees up earnings
Debt is down 20% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 7.25x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 74% above the peer median. That premium needs a reason that persists, or it closes.
Growth barely outpaces inflation
Revenue compounding at 2.2% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 14%✓ 16.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 2.2% CAGR
Latest reported year was 15.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹5,476 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 17%✓ 19.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

8 good · 1 neutral · 2 weak

Market Cap

₹1.59 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

28.8x

Fair

Fairly valued against the generic band

P/B Ratio

5.34x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹62.22

Profitable

Profitable on a per-share basis

ROE

19.2%

Strong

Strong capital efficiency

ROCE

19.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

7.25x

High

High leverage

Revenue Growth (YoY)

15.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

32.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

2.85%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹4,498 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹1,790

P/E (Forward)

20.1x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

11.4%

Good

Assets are working hard

Operating Margin

14.8%

Average

Average margins

Net Margin

9.0%

Average

Average bottom-line conversion

Current Ratio

1.97

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.15

Defensive

Steadier than the market

52W Range Position

88%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

1548.8 / 1577.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

74.6

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹53,290 Cr	₹51,996 Cr	₹52,988 Cr	₹56,815 Cr	+2.2%
EBITDA	₹8,796 Cr	₹5,557 Cr	₹7,273 Cr	₹9,138 Cr	+1.3%
EBITDA Margin	16.5%	10.7%	13.7%	16.1%	—
PAT (Net Profit)	₹4,831 Cr	₹2,358 Cr	₹4,252 Cr	₹4,811 Cr	-0.1%
EPS	₹54.54	₹26.58	₹47.91	₹54.19	-0.2%
ROE	17.3%	8.8%	15.5%	16.2%	—
ROCE	20.6%	11.7%	18.8%	19.8%	—
Total Debt	₹2,740 Cr	₹2,537 Cr	₹2,025 Cr	₹2,186 Cr	-7.3%
Free Cash Flow	₹4,557 Cr	₹5,585 Cr	₹5,192 Cr	₹5,476 Cr	+6.3%

🟢 Revenue has grown at 2.2% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (1.3% a year).

🟡 EBITDA Margin has held roughly flat at 16.1% over 3 years.

🟡 PAT (Net Profit) has been broadly flat over 3 years (-0.1% a year).

🟡 EPS has been broadly flat over 3 years (-0.2% a year).

🔴 ROE has fallen from 17.3% to 16.2% over 3 years (-1.1 pts).

🟡 ROCE has held roughly flat at 19.8% over 3 years.

🟢 Total Debt has shrunk at 7.3% a year over 3 years.

🟢 Free Cash Flow has grown at 6.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹49,369 Cr

Total Liabilities

₹19,292 Cr

Total Debt

₹2,186 Cr

Cash & Equivalents

₹5,046 Cr

Operating Cash Flow

₹6,172 Cr

Capex

-₹696 Cr

Shareholding (proxy)

Institutional Holding

44.2%

Insider Holding

37.1%

Corporate Actions

Next Earnings

14 Jan 2027

Dividend Rate

₹51

Ex-Dividend Date

23 Oct 2026

Analyst Consensus

Recommendations

25 Buy · 9 Hold · 4 Sell

Target Price (Mean)

₹1,747.15

-2.4% vs CMP

Target Range

₹1,220 – ₹2,000

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

4 mixed2 general

₹1,747 - That's What Analysts Think Tech Mahindra Limited (NSE:TECHM) Is Worth After These Results

Simply Wall Street, 18 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Tech Mahindra shares see sharpest fall among IT peers: What is behind the slide?

Upstox, 12 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Tech Mahindra Hits Base Target; Pick of the Week Delivers 8%

HDFC Sky, 16 Oct

Tech Mahindra Shares Surge 7% After Strong Q2 Results; Buy, Sell

APAC Media, 16 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Tech Mahindra shares fall up to 4% ahead of Q2 results this week: Here's why

Moneycontrol.com, 12 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Stock Picks Today: Nestle, Tech Mahindra, Wipro, Yes Bank, Polycab, And More On Brokerages' Radar

NDTV Profit, 16 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🟢Business QualityStrong13.3/20

🟢Financial HealthStrong14.5/20

🔴GrowthWeak5/20

🟢ProfitabilityStrong10.2/15

🟡ValuationFair7.8/15

🟢RiskLow6.5/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 14%16.1%
✗Revenue growth stays above 4% a year2.2% CAGR
✓Free cash flow remains positive₹5,476 Cr
✓Debt / EBITDA stays below 2x0.2x
✓ROCE stays above 17%19.8%