Tech Mahindra shares gain 5% after Q2 results. Should you buy, sell or hold the stock?

ETMarkets.com

Tech Mahindra shares rose after Q2FY27 net profit increased 32.7% YoY.

Revenue from operations rose 15.6% YoY to Rs 16,180.2 crore in Q2FY27, up from Rs 13,994.9 crore in Q2FY26. EBITDA increased 32.8% to Rs 2,878.5 crore from Rs 2,168 crore in the year-ago quarter.

Buy, sell or hold Tech Mahindra shares?

Nomura retains a Neutral call and sees no upside for Tech Mahindra stock. Nomura expects Tech Mahindra to deliver above-peer growth in FY27, supported by the ramp-up of two large telecom deals won in the second half of FY26 and growth across other verticals.

Tech Mahindra's target of achieving an average EBIT margin of 15% in FY27 remains unchanged. Management identified AI-led productivity improvements, including converting time-and-material contracts to fixed-price contracts, and continued operational efficiencies under Project Fortius as key drivers of margin expansion over FY26.

With Tech Mahindra's management having largely achieved its three-year goals, Nomura believes investors will now focus on the company's future growth strategy, particularly its ability to broaden growth across verticals.

Nuvama has maintained a Buy rating on Tech Mahindra with a target price of Rs 1,950, citing strong deal wins and the potential for earnings growth. The brokerage said four consecutive quarters of deal wins exceeding $1 billion position Tech Mahindra to outperform all its large-cap peers on growth in FY27. Margins are also expected to approach the company's 15% target.

Nuvama expects Tech Mahindra to deliver an earnings compound annual growth rate (CAGR) of 25% over the next two years. It believes this growth outlook supports valuations comparable to LTIMindtree, rather than those of the top three large-cap IT companies.

Choice Institutional Equities maintains an Add rating on the stock and a target price of Rs 1,775 (11% upside). The management retained its 15% FY27 margin target and sees further productivity benefits from AI toolchains, pyramid optimisation and headcount release. “TechM Helix is moving from capability-building to scaled execution, with AI revenue disclosure commencing in H2FY27. Demand commentary remains constructive, with a strong Comms pipeline and BFSI expected to return to 8%+ growth; European auto weakness is viewed as manageable,” it added.