In the ever-evolving world of Indian IT services, one name that often finds itself in contrasting headlines is Tech Mahindra. A part of the Mahindra Group, Tech Mahindra has long been considered a strong player in telecom-centric IT solutions. But with increased competition and shifting technology priorities, does it still have the mojo to deliver long-term value to shareholders?
This deep-dive blog breaks down the business, performance metrics, peers, opportunities, challenges, and recent developments of Tech Mahindra as of April 15, 2025.
How Has Tech Mahindra’s Stock Performed Over Time?
Tech Mahindra’s journey in the public markets has been filled with ups and downs. As of April 22, 2025, the stock trades at Rs 1,315.55 on the NSE. In the past year, it has delivered a 12.1% return to investors. The company’s current market cap stands at approximately Rs 1.27 lakh crore, reflecting steady institutional interest despite sectoral headwinds (source).
Historically, the stock has underperformed peers like TCS and Infosys in terms of long-term compounding, largely due to a narrower industry focus and lower profit margins. However, recent strategic shifts and leadership changes have helped the stock gain traction again.
What Are the Core Businesses of Tech Mahindra?
Tech Mahindra offers a diverse suite of services spread across multiple verticals. Its business segments include:
- IT Services: Constitutes over 85% of revenue. Services include application development, maintenance, and infrastructure management.
- Business Process Outsourcing (BPO): Encompasses customer support, finance & accounting, and human resources outsourcing.
- Engineering Services: Focuses on product engineering, embedded systems, and design automation.
- Consulting & Digital Transformation: Involves strategic advisory, enterprise architecture, and cloud transformation.
- Telecom Solutions: A legacy stronghold, contributing significantly to the company’s top line.
Key client verticals include telecommunications, BFSI, healthcare, manufacturing, energy, and retail (source).
How Does Tech Mahindra Compare to Its Peers?
To understand Tech Mahindra’s standing, let’s look at a few metrics compared to other major IT players:
| Company | P/E Ratio | Market Cap (Rs Cr) | ROE (%) | Net Profit Margin (%) |
|---|---|---|---|---|
| Tech Mahindra | 35.78 | 1,22,000 | 9.18 | 5.05 |
| TCS | 24.58 | 14,63,372 | 35.0 | 21.0 |
| Infosys | 22.08 | 7,34,141 | 28.0 | 18.0 |
| HCL Tech | 22.86 | 3,18,061 | 20.0 | 15.0 |
| Wipro | 18.89 | 3,17,428 | 17.0 | 14.0 |
Source: Screener, Groww, Moneycontrol
Clearly, Tech Mahindra trades at a premium P/E despite having one of the lowest margins and ROE among peers. This indicates that the market expects significant earnings improvement in the near future.
What Are the Pros of Investing in Tech Mahindra?
1. Diversified Client Base: With more than 1,000 active clients across verticals and geographies, client risk is well-distributed.
2. Strategic Alliances: Recent partnerships with companies like ServiceNow and Nuix have opened up next-gen technology revenue streams (source).
3. Growth in Engineering & 5G: The company has made strategic investments in 5G solutions and network transformation services, which are gaining traction.
4. Turnaround Strategy: Under CEO Mohit Joshi, the company has launched Project Fortius—a three-year operational overhaul focused on cost control, margin expansion, and vertical diversification (source).
5. Focus on Sustainability: Tech Mahindra has been recognized in S&P Global’s Sustainability Yearbook 2025 (source).
What Are the Risks and Weaknesses?
1. Lagging Margins: With a net profit margin of just 5.05%, Tech Mahindra trails well behind industry averages.
2. Telecom Dependence: Nearly 40% of the company’s revenue comes from telecom clients, exposing it to sector-specific headwinds.
3. Execution Challenges: Scaling new verticals like BFSI and healthcare is resource-intensive and execution-sensitive.
4. Volatile Earnings: Inconsistent quarterly performances have made investors cautious.
5. High Expectations: The current valuation already prices in a turnaround, leaving less room for error.
What Has Tech Mahindra Been Up To Recently?
- ServiceNow Partnership: Targeted at enhancing broadband offerings for communication service providers (source).
- Nuix Collaboration: Aims to strengthen enterprise fraud detection and data protection (source).
- Altavec Launch: A spatial-tech platform aimed at smart cities and geospatial analytics (source).
- Sustainability Milestone: Recognized globally for ESG efforts (source).
What Are Tech Mahindra’s Plans for the Future?
CEO Mohit Joshi has laid out a bold multi-year strategy:
- Project Fortius: Aimed at revamping internal systems and boosting profitability.
- Vertical Expansion: Plans to reduce telecom dependency by growing BFSI, healthcare, and energy verticals.
- AI & Automation: Increasing investments in generative AI, edge computing, and workflow automation.
- 5G & Network Transformation: Continued focus on monetizing its first-mover advantage in 5G deployments (source).
What Are the Opportunities and Risks?
Opportunities:
- Diversifying away from telecom to BFSI and healthcare
- Growing demand for AI, 5G, and digital transformation
- Scope to improve margins and returns under new leadership
Risks:
- Margin pressure compared to peers
- Execution challenges in new verticals
- Over-dependence on telecom sector still persists
Where Does Tech Mahindra Stand in Terms of Market Opportunity?
The global IT services market is expected to reach $1.36 trillion by 2027, with India playing a key outsourcing role. Within this, segments like AI/ML, cloud services, and 5G are growing at over 20% CAGR.
Tech Mahindra’s push in these high-growth areas gives it an opportunity to outpace overall sector growth, provided execution is strong (source).
Is Tech Mahindra Still a Smart Bet?
That depends on your investment horizon. Short-term margin pressure may persist through FY25, but long-term strategic bets could pay off by FY27.
What works for Tech Mahindra is its:
- Deep telecom expertise
- Renewed leadership
- Active push into future-ready technologies
- Strong balance sheet with low debt
But what works against it is:
- Low profitability vs. peers
- Valuation already factoring in a recovery
If the company can deliver on Project Fortius and diversify successfully, Tech Mahindra may evolve from a telecom-centric player into a well-rounded digital services powerhouse.
Disclaimer: This blog is meant purely for informational purposes. It should not be construed as investment advice. Investors are advised to do their own due diligence or consult a financial advisor before making any investment decisions.
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