Tech Mahindra Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Shareholders might have noticed that Tech Mahindra Limited (NSE:TECHM) filed its third-quarter result this time last week. The early response was not positive, with shares down 2.4% to ₹1,322 in the past week. It was not a great result overall. Although revenues beat expectations, hitting ₹131b, statutory earnings missed analyst forecasts by 19%, coming in at just ₹5.76 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Tech Mahindra

Taking into account the latest results, the current consensus from Tech Mahindra's 39 analysts is for revenues of ₹557.5b in 2025. This would reflect a modest 5.7% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 79% to ₹57.10. In the lead-up to this report, the analysts had been modelling revenues of ₹554.1b and earnings per share (EPS) of ₹58.13 in 2025. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 5.2% to ₹1,252despite 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. 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. The most optimistic Tech Mahindra analyst has a price target of ₹1,555 per share, while the most pessimistic values it at ₹810. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Tech Mahindra's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 4.6% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.5% annually. Factoring in the forecast slowdown in growth, it seems obvious that Tech Mahindra is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Tech Mahindra going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Tech Mahindra that you need to take into consideration.

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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.