Tech Mahindra Stock Surges 4% on Strong Q3, JPMorgan Upgrade

Introduction: Strong Quarterly Performance Boosts Investor Confidence

Shares of Tech Mahindra Ltd. surged nearly 4% on Monday, January 19, 2026, trading near their 52-week high. The rally followed the IT services firm's announcement of its third-quarter financial results, which surpassed market expectations on revenue growth and margin performance, prompting positive revisions from several brokerage firms.

A Closer Look at Q3 Financials

For the quarter ended December 31, 2025, Tech Mahindra reported a consolidated net profit of ₹1,122 crore, marking a 14% increase from the ₹983.2 crore reported in the same period a year earlier. Revenue from operations grew 8.34% year-on-year to ₹14,393 crore. In constant currency terms, revenue grew 1.7%, comfortably beating analyst estimates which were pegged around 0.6%.

The company's operating performance showed significant improvement. The EBIT margin expanded sequentially by 100 basis points to 13.1%, a sharp recovery from the 4.7% low seen in the second quarter of FY24. According to the management, this marks the ninth consecutive quarter of margin expansion, reinforcing the company's progress towards its long-term financial goals.

Record Deal Wins Signal Turnaround

A key highlight of the quarter was the robust deal momentum. Tech Mahindra secured new deals with a Total Contract Value (TCV) of $1,096 million, a growth of 47% year-on-year. The company stated that its deal wins on a last-twelve-month (LTM) basis were the highest achieved in the past five years. This performance was bolstered by a large $100 million deal in the communications vertical in Europe, signaling a potential turnaround for a segment that had been under pressure. The telecom segment, which contributes about 35% of total revenue, posted 4.6% year-on-year growth in dollar terms, breaking a contraction trend seen in nine of the last ten quarters.

JPMorgan Upgrades Stock with Bullish Outlook

Following the strong results, global brokerage firm JPMorgan upgraded Tech Mahindra to 'Overweight' from a 'Neutral' rating. The firm also raised its price target for the stock significantly to ₹2,100 per share. JPMorgan cited stronger and more sustainable growth as the primary reason for its optimism, increasing its target valuation multiple for the company to 24x from the previous 20x. The brokerage anticipates that mega deal ramp-ups could help Tech Mahindra match the growth rates of peers like HCL Technologies and Infosys, projecting around 6% growth in FY27.

Divergent Views Among Analysts

While the overall sentiment was positive, analyst opinions remained varied. Motilal Oswal reiterated a 'Buy' rating with a target price of ₹2,350, implying a potential upside of 41%. The firm believes the turnaround in the communications business and steady margin expansion support a bullish stance. In contrast, Nuvama upgraded the stock to 'Hold' from 'Reduce' and raised its target price to ₹1,650. While acknowledging the strong Q3 execution, Nuvama expressed caution regarding the stock's valuation and remained skeptical about the company's ability to achieve its ambitious 15% margin target by FY27.

Management Commentary and Future Goals

CEO and Managing Director, Mohit Joshi, attributed the strong performance to sustained investments in sales and the growing relevance of the company's AI-led offerings. He stated, "Our deal wins on an LTM basis are the highest we have achieved in the past five years... these efforts are laying a strong foundation for long-term value creation." Chief Financial Officer, Rohit Anand, highlighted the well-rounded financial performance, noting the ninth consecutive quarter of margin expansion and strong cash generation. The management reiterated its aspiration to reach 15% EBIT margins by FY27, a goal that now appears more attainable to many market observers.

Market Reaction and Stock Performance

The market reacted positively to the news, with Tech Mahindra's shares trading 3.57% higher at ₹1,730.10 on January 19. The stock has gained nearly 8% in 2026 so far, reflecting growing investor confidence in the company's strategic direction and execution capabilities.

Conclusion

Tech Mahindra's third-quarter results have provided clear evidence of a business turnaround, driven by record deal wins and consistent margin improvement. While analyst views differ on valuation, the strong operational performance and a clear path toward stated FY27 goals have renewed optimism. The JPMorgan upgrade further solidifies the positive sentiment, positioning the company for potentially stronger growth ahead.