TECHM - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.1

📊 Core Financials Breakdown

Profit Growth: Qtr PAT jumped 79.3% from ₹710 Cr. to ₹1,178 Cr., signaling strong operational leverage.

EPS: ₹41.2, with recent analyst upgrades to ₹46.37

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ROCE (18.2%) & ROE (14.0%): Healthy, though slightly below top-tier IT peers.

Debt-to-Equity: Just 0.04 — nearly debt-free, which enhances financial resilience.

Cash Flow & Conversion: Strong cash conversion ratio of 108.59%

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, indicating efficient operations.

💰 Valuation Metrics

Metric Value Insight

P/E Ratio 37.7 Premium vs. industry average (30.0) — suggests overvaluation.

P/B Ratio ~6.77 High, but typical for asset-light tech firms.

PEG Ratio -2.67 Negative due to inconsistent earnings growth — caution advised.

Intrinsic Value ~₹1,400–₹1,450 (est.) Current price of ₹1,551 is slightly above fair value.

🧠 Business Model & Competitive Edge

Segments: IT services, BPO, telecom solutions — diversified but telecom-heavy.

Strengths

Global presence and long-term client relationships.

Conservative beta (0.1656) — low volatility

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Challenges

Revenue CAGR of 8.4% over 5 years is modest

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Profit growth has been negative over 3 years (-5.91%)

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📈 Technicals & Entry Guidance

RSI: 59.6 — neutral zone, not overbought.

MACD: 7.08 — bullish momentum.

DMA 50/200: Price is consolidating near both — potential breakout setup.

📌 Entry Zone: ₹1,420–₹1,480 — ideal for accumulation if price dips.

🕰️ Long-Term Outlook

Analyst Target: ₹1,732 median, with upside potential to ₹1,900

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CAGR Potential: Estimated 8–12% over the next 5 years, driven by AI, 5G, and digital transformation

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Holding Guidance: Suitable for long-term investors seeking moderate growth and stable dividends.

Let me know if you'd like a peer comparison or a forecast model built around your investment horizon.

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economictimes.indiatimes.com

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blog.marketmilestone.in

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trendlyne.com

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