Motilal Oswal has reiterated a BUY call on Tech Mahindra, arguing that the company’s turnaround is gaining traction and that FY27 growth visibility has improved meaningfully. The brokerage has set a target price of Rs 1,900, implying 26% upside from the current market price of Rs 1,510, while highlighting healthy deal momentum, margin expansion, and a more balanced growth mix across verticals and geographies. In its latest result update, the research house said Tech Mahindra’s 1QFY27 performance was stronger than expected, even in a seasonally weak quarter, and that the stock still offers room for re-rating if execution stays firm.

Revenue momentum accelerates

Top-line performance came in ahead of expectations. Tech Mahindra reported 1QFY27 revenue of USD 1.66 billion, up 2.6% quarter-on-quarter in constant currency, versus the brokerage’s estimate of 1% growth. In rupee terms, revenue rose 17.7% year on year, underscoring the benefit of stronger execution and a favorable operating mix. Motilal Oswal now expects organic constant-currency revenue growth of 7.1% in FY27 and 7.6% in FY28, up sharply from its earlier estimates of 4.6% and 5.2%.

Verticals broaden the story

Growth was not concentrated in one pocket. Retail, BFSI, and Manufacturing all delivered sequential improvement, while Communications, after several quarters of drag, is beginning to look more supportive. BFSI grew 8.1% year on year, led by payments modernization, wealth platforms, regulatory compliance, and AI-led transformation, while Manufacturing posted the strongest vertical growth at 17.2% year on year. Management also pointed to Europe as a key driver, helped by an accelerated automotive program and a deeper AI-first private cloud partnership with Telefónica Germany.

Deal wins support the runway

New business momentum is clearly improving. Net new deal TCV stood at USD 1,078 million, up 33.3% year on year, a sign that the company’s sales engine is working more effectively. The report highlights wins across healthcare, autonomous driving, aerospace and defense, and payments technology, showing that deal flow is becoming broader and more diversified. Motilal Oswal said this deal ramp-up is central to its confidence that Tech Mahindra can sustain above-peer growth through FY27.

Margins keep climbing

Profitability remains on an upward slope. EBIT margin expanded to 14.4%, up 60 basis points sequentially and 330 basis points year on year, marking the 11th straight quarter of margin expansion. The brokerage noted that volume growth and Project Fortius savings helped offset seasonality and mix-related pressure from the accelerated European auto program. It still believes the company is on track to reach its FY27 exit margin target of around 15%, even after factoring in phased wage hikes and continuing AI investments.

Bottom line and target

Motilal Oswal’s investment case rests on a credible turnaround. The firm values Tech Mahindra at 20 times FY28E EPS, arriving at a target price of Rs 1,900 and maintaining its BUY rating. It said the company remains its preferred pick among large-cap IT names because the combination of faster growth, improving vertical breadth, healthy deal flow, and margin expansion could support a fresh rerating. For investors, the key levels from the report are the current price of Rs 1,510 and the target of Rs 1,900, with the brokerage framing the stock as a turnaround story rather than a defensive yield play.

What investors should track

Three monitorables stand out from the report. First, large-anchor client spending still needs a fuller recovery, since growth in the top client buckets remains soft. Second, the pace of telecom deal ramp-ups will matter because one recently won deal has yet to start contributing meaningfully. Third, wage inflation and AI-related cost pressure could create near-term noise, even though management remains confident about achieving above-peer growth and a 15% operating margin by FY27.