BENGALURU (Reuters) – Tech Mahindra shares rose 13.2 on Friday after India’s fifth-largest IT company announced a turnaround plan to help with weak sales growth over the past three quarters. %, marking the first significant intraday increase in about eight years.
The stock rose 8.6 per cent to Rs 1,292.25 as of 11:48 am IST, leading the rise in the Nifty IT index, which rose 1.8 per cent.
Including today’s movements, Tech Mahindra is up 2% year-to-date, compared to a 4% decline in the IT index. Big rival Infosys fell 6.8%, while Tata Consultancy Services rose 2.2%.
Pune-based Tech Mahindra on Thursday announced a three-year plan to increase revenue and double operating profit margin to 15% by FY2027. The company reported a revenue decline of 2% to 6.2% in rupee terms last year. 3 quarters including March quarter.
The brokerage welcomed the company’s turnaround plan, with HSBC saying: “The new transformation plan looks very prudent. We recognize the need for sales investment and cost control to grow profits. I believe that the path to this will be as follows.” It’s challenging at best. ”
However, concerns remained about enforcement. “While management’s plan is comprehensive, there are risks involved in executing it in a weak demand environment,” Jeffries said.
Market leader Tata Consultancy Services missed revenue expectations but said a strong deal pipeline will drive growth this fiscal year.
According to LSEG estimates, at least 13 analysts lowered their price targets for Tech Mahindra and two raised their price targets after the earnings, with the median price target dropping to Rs 1,289.50 from Rs 1,320.50 in March.
(Reporting by Sai Iswarbharath B; Editing by Janen Venkatraman)
