Buy Tech Mahindra Ltd For Target Rs. 1,900 by Motilal Oswal Financial Services Ltd
* We expect revenue to grow 1.0% QoQ CC, largely driven by ramp-ups of recently won deals. We believe Hi-Tech remains muted due to weakness at a semiconductor client, though some stability is visible this quarter.
* BFSI and Retail should drive growth. Manufacturing (dragged by US Auto) and Communications are likely to remain flat with early signs of stabilization. Management sees a sustainable TCV baseline of USD600-800m.
* EBIT margin expected to improve by 50bp QoQ to 11.6%, supported by lower subcontractor costs and SG&A efficiency. We build in 13% exit margin by FY26.
* The outlook on margin gains and segments such as BFS vertical and CME, especially in US and deal TCV, will be the key monitorable.
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