🧠 After years of margin mayhem, TechM posted an 80% PAT jump in FY25. But is this a one-off reboot or a full OS upgrade?
⚡ At a Glance
Tech Mahindra reported ₹4,253 Cr PAT in FY25 — a sharp 77% YoY rebound — and improved margins to 13%. Yet, it’s still the weakest top-tier IT player on revenue growth. At 39x P/E, are we paying for the Mahindra brand or a genuine tech turnaround?
🖥️ 1. What Does Tech Mahindra Do?
Tech Mahindra (TechM) is the IT arm of the Mahindra Group — the only top 5 Indian IT firm not born in Bengaluru.
🧾 Services:
- Application development
- IT-enabled services (BPO/KPO)
- Consulting & transformation
- Telecom & 5G platforms
- Cloud, AI, analytics (aka buzzwords bingo)
📡 Legacy DNA = Telecom IT
💡 New pitch = AI + Experience + Platforms
🪫 2. Why It Crashed (and Then Rebooted)
📉 Between FY22 and FY24:
- Margins fell from 18% → 9%
- PAT dropped from ₹5,630 Cr → ₹2,397 Cr
- Street dubbed it the “Wipro of Mahindra Group” (and not in a good way)
👨💼 Enter CP Gurnani → Exit in 2023
👨💼 Mohit Joshi (ex-Infosys) took charge
📊 FY25 = first full year of new management
📈 3. FY25 Financials: CTRL + ALT + GROW
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 53,290 | 51,996 | 52,988 |
| Net Profit (₹ Cr) | 4,857 | 2,397 | 4,253 |
| OPM % | 15% | 9% | 13% |
| ROE % | 16% | 6% | 15.7% |
| EPS (₹) | 49.6 | 24.1 | 43.4 |
✅ Margins recovered
✅ PAT doubled
❌ Revenue is flat for 3 years
📦 Problem? Weak deal pipeline in FY22–23. Fixing it takes time.
📊 4. Valuation: A Premium Without Premium Growth?
📈 CMP: ₹1,711
💰 EPS FY25: ₹43.43
🧮 P/E = 39.4x
📘 Book Value = ₹279 → P/B = 6.1x
💵 Dividend Yield = 2.63%
🧮 For context, here’s how its peers stack up:
| Company | P/E | ROE % | Revenue Growth |
|---|---|---|---|
| TCS | 25.7 | 30%+ | 5.3% YoY |
| Infosys | 25.6 | 29% | 7.9% |
| HCL Tech | 26.7 | 23% | 6.1% |
| Wipro | 20.9 | 18% | 1.3% |
| TechM | 39.4 | 15.7% | 2% |
| LTIMindtree | 35.1 | 27.6% | 9.9% |
| Persistent | 67.3 | 31.4% | 25% |
❗ TechM trades at a huge premium despite lowest revenue CAGR and ROE among peers.
🧠 5. EduInvesting Fair Value Estimate
Let’s be fair but not Mahindra-fanboyish:
- FY26 EPS Estimate = ₹46–₹48
- Assign a P/E = 25–28x (in line with peers, no turnaround premium)
🎯 Fair Value = ₹1,150 – ₹1,350
At CMP ₹1,711 → Trading at 25–35% over fair value, That’s mahindra love
🪓 6. Risks Still Lurking
- 🔁 Recovery is from a low base — sustainability is unclear
- 🧾 Client concentration risk in telecom vertical
- 👨💼 Execution depends on Mohit Joshi’s next 4 quarters
- 📉 Slowest revenue growth in Tier-1 IT
- 🧘 PSU contract dependency + legacy projects can drag
📣 7. Final Verdict: Turnaround Real or Tech Mirage?
Tech Mahindra is in transition — from an IT services laggard to a transformation hopeful.
✅ FY25 = green shoots
✅ ROCE, ROE improving
✅ Margin profile back to 13%
✅ Dividend yield of 2.6% cushions fall
BUT…
❌ Growth is not yet secular
❌ P/E is inflated
❌ Street may be overestimating the speed of revival
A good company finally behaving well — but the market’s treating it like it’s already Infosys 2.0.
🎯 EduInvesting Fair Value Range = ₹1,150 – ₹1,350
(Based on FY26 EPS estimate of ₹46–48 and peer-aligned P/E of 25–28x)
✍️ Written by Prashant | 📅 18 June 2025
Tags: Tech Mahindra, IT stocks, turnaround stories, Mohit Joshi, Infosys vs TechM, EduInvesting
