Tech Mahindra shares rose nearly 10 percent Shares were up 1,164 points on the BSE in Monday’s early trading session after the company announced the appointment of Mohit Joshi as the new MD and CEO to replace CP Gurnani, who is retiring on December 19, 2023.
Mohit Joshi will join well before that date to allow sufficient transition time Tech Mahindra, He may join in June 2023, as Infosys has announced his resignation on March 11, 2023 and he will be on leave from this date and his last day at Infosys will be June 9, 2023.
“The appointment of Mr. Mohit Joshi clearly signals a change in strategy for TechM given his non-telecom background. That said, we believe the new CEO will have a lot of work to do to turn around TechM’s operations. Accordingly, in the meantime, TechM could underperform competitors. We expect the stock to underperform in the (relatively) near to medium term. TechM’s affordable valuation and high dividend yield limit downside potential, however. is,” said brokerage Nuwama, which has maintained ‘Hold’ rating. it stock with a target value of 1,090 each.
With the announcement of the CEO-designation, the company and the CEO-designate face a real challenge, according to analysts, who believe Mohit’s work is cut short in terms of getting TechM back to industry-average growth rates on a consistent basis. Has gone. , diversifying the revenue base and focus on growing the enterprise business, and improving the company’s operations to increase margins in line with large-cap peers.
“The market may react positively in anticipation of new strategy roll-out by the new CEO to revive Tech Mahindra’s performance. However, we do not believe that the leadership change is likely to alter the earnings fundamentals of the company in the medium term (2-3 years) and revival of growth fundamentals is likely to be a gradual process,” ICICI Securities said in a note. .
The brokerage continues to downgrade the rating (TP: 971) on Tech Mahindra as we believe the company has room for improvement in its digital capabilities and to revive growth it needs to invest in building digital capabilities.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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