₹1,747 - That's What Analysts Think Tech Mahindra Limited (NSE:TECHM) Is Worth After These Results

It's been a pretty great week for Tech Mahindra Limited (NSE:TECHM) shareholders, with its shares surging 18% to ₹1,790 in the week since its latest second-quarter results. It looks like the results were a bit of a negative overall. While revenues of ₹162b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.7% to hit ₹17.84 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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.

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Taking into account the latest results, the current consensus from Tech Mahindra's 39 analysts is for revenues of ₹647.0b in 2027. This would reflect a modest 5.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 22% to ₹76.15. Before this earnings report, the analysts had been forecasting revenues of ₹639.6b and earnings per share (EPS) of ₹77.58 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

Check out our latest analysis for Tech Mahindra

The consensus price target rose 5.3% to ₹1,747despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Tech Mahindra's earnings by assigning a price premium. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Tech Mahindra at ₹2,000 per share, while the most bearish prices it at ₹1,220. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 11% annualised growth to the end of 2027 ranking favourably alongside historical growth of 5.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 6.3% annually. 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 obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Tech Mahindra analysts - going out to 2029, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Tech Mahindra that you should be aware 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.