⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
TECHM - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | TECHM | Market Cap | 1,68,232 Cr. | Current Price | 1,717 ₹ | High / Low | 1,777 ₹ |
| Stock P/E | 40.0 | Book Value | 221 ₹ | Dividend Yield | 2.62 % | ROCE | 18.2 % |
| ROE | 14.0 % | Face Value | 5.00 ₹ | DMA 50 | 1,616 ₹ | DMA 200 | 1,550 ₹ |
| Chg in FII Hold | -2.66 % | Chg in DII Hold | 3.15 % | PAT Qtr | 1,139 Cr. | PAT Prev Qtr | 1,176 Cr. |
| RSI | 60.2 | MACD | 43.1 | Volume | 6,83,442 | Avg Vol 1Wk | 19,97,524 |
| Low price | 1,209 ₹ | High price | 1,777 ₹ | PEG Ratio | -2.83 | Debt to equity | 0.05 |
| 52w Index | 89.5 % | Qtr Profit Var | 32.7 % | EPS | 41.1 ₹ | Industry PE | 23.9 |
📊 Core Financials
- Revenue Growth: Stable with consistent profitability; PAT at 1,139 Cr. this quarter.
- Profit Margins: Reasonable margins, EPS at 41.1 ₹.
- Debt Ratios: Very low debt-to-equity (0.05), indicating strong balance sheet health.
- Cash Flows: Positive, supported by steady earnings and dividend payouts.
- Return Metrics: ROCE at 18.2% and ROE at 14.0% reflect efficient capital utilization.
💹 Valuation Indicators
- P/E Ratio: 40.0, significantly higher than industry average (23.9), suggesting premium valuation.
- P/B Ratio: ~7.8 (Current Price / Book Value), indicates expensive relative to book value.
- PEG Ratio: -2.83, negative due to slower growth expectations.
- Intrinsic Value: Current price (1,717 ₹) trades above long-term averages, reflecting optimism but limited margin of safety.
🏢 Business Model & Competitive Advantage
- Tech Mahindra operates in IT services and consulting, with diversified global client base.
- Competitive advantage lies in telecom and enterprise solutions, though faces stiff competition from larger peers (Infosys, TCS).
- Strong dividend yield (2.62%) adds to shareholder value.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive near 1,600–1,650 ₹ (close to DMA 50 and support levels).
- Long-Term Holding: Suitable for investors seeking steady dividends and moderate growth. Premium valuation limits upside, but strong fundamentals support long-term holding.
Positive
- Consistent profitability with EPS of 41.1 ₹.
- Strong balance sheet with minimal debt.
- Healthy dividend yield at 2.62%.
Limitation
- High P/E ratio compared to industry average.
- PEG ratio negative, indicating slower growth prospects.
- FII holdings decreased (-2.66%), showing reduced foreign investor confidence.
Company Negative News
- Quarterly PAT slightly declined from 1,176 Cr. to 1,139 Cr.
- Premium valuation may limit near-term upside.
Company Positive News
- DII holdings increased significantly (+3.15%), reflecting domestic institutional confidence.
- Strong technical momentum with RSI at 60.2 and MACD positive.
Industry
- IT services industry trades at an average P/E of 23.9, lower than Tech Mahindra’s valuation.
- Sector growth driven by digital transformation, cloud adoption, and AI integration.
Conclusion
- Tech Mahindra is fundamentally strong with consistent earnings, low debt, and attractive dividend yield.
- Valuation is stretched compared to peers, making entry more favorable near support levels.
- Long-term investors can hold for stability and dividends, while growth-focused investors may find limited upside unless earnings accelerate.
Would you like me to also prepare a peer comparison table (Infosys, TCS, Wipro vs Tech Mahindra) in the same HTML style to highlight relative strengths and weaknesses?