Tech Mahindra Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
It's been a good week for Tech Mahindra Limited (NSE:TECHM) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.1% to ₹1,573. Revenues of ₹157b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹16.50, missing estimates by 7.9%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Tech Mahindra after the latest results.
Following the latest results, Tech Mahindra's 41 analysts are now forecasting revenues of ₹635.3b in 2027. This would be an okay 7.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 33% to ₹77.22. In the lead-up to this report, the analysts had been modelling revenues of ₹622.1b and earnings per share (EPS) of ₹77.98 in 2027. There doesn't appear to have been a major change in sentiment following the results, other than the modest lift to revenue estimates.
Check out our latest analysis for Tech Mahindra
The consensus price target increased 5.5% to ₹1,613, with an improved revenue forecast carrying the promise of a more valuable business, in time. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Tech Mahindra at ₹1,921 per share, while the most bearish prices it at ₹1,080. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tech Mahindra's past performance and to peers in the same industry. The analysts are definitely expecting Tech Mahindra's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2027 ranking favourably alongside historical growth of 5.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Tech Mahindra is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Tech Mahindra going out to 2029, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for Tech Mahindra that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.