TECHM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | TECHM | Market Cap | 1,44,380 Cr. | Current Price | 1,474 ₹ | High / Low | 1,854 ₹ |
| Stock P/E | 35.8 | Book Value | 222 ₹ | Dividend Yield | 3.05 % | ROCE | 24.3 % |
| ROE | 18.3 % | Face Value | 5.00 ₹ | DMA 50 | 1,452 ₹ | DMA 200 | 1,503 ₹ |
| Chg in FII Hold | 0.65 % | Chg in DII Hold | -0.45 % | PAT Qtr | 541 Cr. | PAT Prev Qtr | 1,139 Cr. |
| RSI | 55.2 | MACD | 3.33 | Volume | 29,39,615 | Avg Vol 1Wk | 26,20,040 |
| Low price | 1,304 ₹ | High price | 1,854 ₹ | PEG Ratio | 15.8 | Debt to equity | 0.07 |
| 52w Index | 30.8 % | Qtr Profit Var | -23.8 % | EPS | 39.4 ₹ | Industry PE | 21.6 |
📊 TECHM demonstrates strong fundamentals with ROCE at 24.3% and ROE at 18.3%, reflecting efficient operations. EPS of 39.4 ₹ supports profitability, while a healthy dividend yield of 3.05% adds investor appeal. Debt-to-equity ratio of 0.07 indicates low leverage. However, valuation is stretched with a P/E of 35.8 versus industry average of 21.6, and a high PEG ratio of 15.8 suggests expensive growth expectations. Recent quarterly PAT dropped sharply (-23.8%), raising concerns about earnings momentum.
💡 Entry Price Zone: Attractive accumulation between 1,360 ₹ – 1,400 ₹ near support levels. Buying closer to 1,500 ₹ carries valuation risk.
📈 Long-Term Holding Guidance: TECHM is fundamentally strong and suitable for long-term holding (3–5 years). Investors should monitor earnings growth and valuation multiples. Holding is justified if profitability stabilizes and digital transformation demand continues to support the IT sector.
Positive
- Strong ROCE (24.3%) and ROE (18.3%).
- Healthy dividend yield of 3.05% provides steady returns.
- Low debt-to-equity ratio (0.07) ensures financial stability.
- EPS of 39.4 ₹ reflects consistent profitability.
- FII holdings increased (+0.65%), showing foreign investor confidence.
Limitation
- Quarterly PAT dropped from 1,139 Cr. to 541 Cr. (-23.8%).
- High P/E (35.8) compared to industry average (21.6).
- PEG ratio of 15.8 indicates expensive valuation relative to growth.
- DII holdings decreased (-0.45%), showing domestic caution.
- Price faces resistance near 200 DMA (1,503 ₹).
Company Negative News
- Sharp decline in quarterly profitability.
- Domestic institutional investors reduced holdings.
Company Positive News
- Strong dividend payout supports investor returns.
- Foreign investor confidence reflected in FII inflows.
Industry
- Industry PE at 21.6, while TECHM trades at 35.8, showing premium valuation.
- IT sector faces margin pressures but benefits from digital transformation demand.
Conclusion
✅ TECHM is fundamentally strong but currently under valuation pressure. Best suited for disciplined long-term investors who can accumulate near support zones. Exit opportunities may arise near 1,800 ₹ if valuations stretch without earnings growth. Momentum traders should exercise caution around resistance levels.
Would you like me to extend this into a sector overlay with peer benchmarking (Infosys, TCS, Wipro, HCL Tech) so you can see how TECHM stacks up against the rest of the IT pack?