TECHM - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.7

📊 Fundamental Analysis

Here’s a breakdown of key metrics and what they suggest about Tech Mahindra (TECHM)

✅ Strengths

Low Debt: Debt-to-equity ratio of 0.07 indicates strong financial discipline.

Healthy Return Metrics

ROCE: 18.6% — efficient capital usage

ROE: 14.6% — decent shareholder return

Dividend Yield: 3.10% — attractive for income-focused investors

Stable Profitability: PAT has remained steady quarter-over-quarter (₹1,129 Cr vs ₹1,142 Cr)

Strong EPS: ₹46.4 — supports valuation

⚠️ Concerns

High P/E: 31.6 vs Industry PE of 29.1 — slightly overvalued

Negative PEG Ratio (-2.93): Indicates poor earnings growth relative to valuation

Weak Technicals

RSI: 24.4 — oversold zone

MACD: -43.2 — bearish momentum

Price below both DMA 50 and DMA 200 — downtrend confirmation

Flat Institutional Activity: Minimal change in FII/DII holdings

📈 Valuation & Entry Price Zone

Given the current price of ₹1,454 and technical weakness, ideal entry would be

Entry Zone: ₹1,300–₹1,370

Close to support levels and oversold RSI

Offers better margin of safety relative to valuation

🧭 Long-Term Investment Outlook

Tech Mahindra is a moderately strong long-term candidate, especially for dividend-seeking investors. However, growth concerns reflected in the PEG ratio and high P/E suggest limited upside unless earnings accelerate.

Hold if already invested, but consider trimming if price rebounds toward ₹1,600–₹1,650 without earnings improvement.

Holding Period: 2–3 years minimum to evaluate turnaround in growth metrics and sector tailwinds.

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹1,600–₹1,650

Near DMA resistance and psychological level

Full Exit: If PEG remains negative and ROE/ROCE stagnate over 2–3 quarters

Reinvest only if PEG turns positive and EPS growth resumes

Would you like a comparison with peers like Infosys or TCS to see how TECHM stacks up?

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