The analyst said the stock looks expensive versus peers and noted that while deal wins and margin initiatives are positives, attrition, cost pressures, and U.S. policy changes remain key risks.
Shares of Tech Mahindra were trading 1.6% lower on Tuesday, as they extended losses after the U.S. administration, led by President Donald Trump, announced major changes to the H-1B visa programme that include a $100,000 application fee for new H-1B visas.
The move jolted India’s IT services space, taking the Nifty IT index down 0.4%, with all 10 stocks in the red. Tech Mahindra was one of the five top losers on the day, along with Coforge, HCLTech, Tata Consultancy Services, and Infosys.
Technical View
SEBI-registered analyst Deepak Pal said Tech Mahindra ended the session near ₹1,505 after briefly hitting ₹1,509. He said the stock fell below its 20-day and 50-day moving averages, which is a short-term negative.
The momentum indicator, the Relative Strength Index, fell to around 47. The Parabolic SAR, which follows trend reversals, flashed a bearish signal. Another key indicator, the MACD, also pointed to fading trend strength.
The stock failed to hold above its longer-term 100-day and 200-day moving averages, leaving strong resistance around ₹1,550. Pal identified the next area of support around ₹1,490 to ₹1,470.
Fundamental View
On the fundamentals, Pal said Tech Mahindra’s latest quarterly results showed a healthy 34% year-on-year jump in profit after tax and some margin improvement. However, both revenue and consolidated profit slipped compared with the previous quarter.
He noted that the stock looks expensive with a price-to-earnings ratio near 33 and enterprise value to EBITDA above 19, higher than many peers.
Return on equity sits at 15.5%, but operating profit has grown at just 6.6% per year on average over the past five years. While debt remains low with a debt-to-equity ratio of 0.15, Pal pointed out that margins and earnings per share have been weakening.
Factors At Play
Pal added that Tech Mahindra has positives such as steady deal wins, portfolio expansion and its ongoing “Project Fortis” program aimed at boosting margins. But he cautioned that employee attrition and cost control remain challenges.
On a broader level, he said the entire IT sector is grappling with tighter client budgets, U.S. visa fee hikes, and currency headwinds that are weighing on performance.
What Is The Retail Mood?
On Stocktwits, retail sentiment was ‘neutral’ amid ‘normal’ message volume.
Tech Mahindra’s stock has declined 13.1% so far in 2025.
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