Tech Mahindra (TECHM)
Slow GrowerFairStock Score: 61/100 — STEADY
Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 1/1
Key Financials
| Current Price | ₹1,632.8 |
| Market Cap | ₹1,44,641.45 Cr |
| P/E Ratio | 28.25 |
| ROCE | 18.56% |
| ROE | 16.9% |
| Dividend Yield | 3.12% |
| Profit Growth | -3.44% |
| Debt/Equity | 0.07 |
| Sales Growth | 9.11% |
| Free Cash Flow | ₹5,806 Cr |
| Promoter Holding | 34.97% |
| 52-Week Range | ₹1,304.1 — ₹1,854 |
| Sector | IT - Software |
| Book Value | ₹334.41 |
Strengths
- Strong profitability metrics: ROE 16.90% and ROCE 18.56%.
- Very low leverage: debt/equity 0.07 with healthy Altman Z-score 4.27.
- Solid cash generation: FCF ₹5,806 crore supporting dividend yield of 3.31%.
- Piotroski F-Score 8/9 indicates good earnings quality and financial health.
- Profit growth 22.58% despite modest sales growth shows operating leverage.
Concerns
- Expensive valuation: P/E 27.66 and P/B 5.09 versus book value of ₹279.26.
- Graham Number ₹545.80 implies negative margin of safety of -148.77%.
- Moderate to slow growth: sales growth 5.05% and 5-yr revenue CAGR 6.96%.
- PEG 1.68 suggests the growth rate does not justify the current price.
AI Analysis
Tech Mahindra presents a mixed picture. The business quality is respectable: return on equity is 16.90% and return on capital employed is 18.56%, while debt-to-equity is only 0.07. A Piotroski score of 8/9 and an Altman Z-score of 4.27 point to a financially sound operator. Free cash flow of ₹5,806 crore gives real support to the 3.31% dividend yield. These figures suggest a company with a narrow moat, built on client relationships and execution, but not a phenomenal franchise. What bothers me is the price. At ₹1,421.50, the P/E is 27.66 and the P/B is 5.09 against a book value of just ₹279.26. The Graham Number is only ₹545.80, so the margin of safety is deeply negative at nearly -149%. Sales growth is 5.05%, and five-year revenue CAGR is 6.96%; the 22.58% profit growth is good, but a PEG of 1.68 tells me the market is already paying up for that improvement. The latest quarter shows sales of ₹14,393 crore and net profit of ₹1,119 crore, so the company is profitable and steady, but steady is not a reason to overpay. A value investor must compare price to value, and by Graham's arithmetic there is no cushion. I would keep Tech Mahindra on a watchlist and wait for a more reasonable price, perhaps closer to the lower end of its 52-week range, before treating it as a buy.
Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer