Tech Mahindra Shares Rally 8.12% After Q2 Results; 1:1 Bonus Issue Adds to Investor Cheer

Tech Mahindra shares surged 8.12 per cent to Rs 1,783.90 in Intraday trade on October 16, as investors reacted positively to the company's strong Q2 FY27 performance, robust deal wins and the announcement of a 1:1 Bonus issue.

Tech Mahindra shares extended their gains on Friday following the company's September-quarter results announced after market hours on October 15. Based on the 12:32 pm quote in the supplied market snapshot, the stock was trading at Rs 1,783.90 against the previous close of Rs 1,650. The stock opened at Rs 1,712 and touched an intraday high of Rs 1,797, bringing it closer to its 52-week high of Rs 1,854. Earlier in the session, Reuters reported the stock up more than 6 per cent, with IT stocks leading the broader market recovery. 

The sharp move came after Tech Mahindra reported a strong quarter, with revenue growth accelerating, margins improving and new deal wins remaining above the $1 billion mark for the fourth consecutive quarter.

Q2 Numbers Show Stronger Growth

Tech Mahindra's consolidated revenue from operations rose 15.6 per cent year-on-year to Rs 16,180.2 crore in Q2 FY27, compared with Rs 13,994.9 crore in the year-ago quarter. Revenue also increased 3 per cent sequentially.

Profit after Tax attributable to owners rose 32.7 per cent year-on-year to Rs 1,585.6 crore from Rs 1,194.5 crore, while sequentially, profit increased 8.2 per cent from Rs 1,465.1 crore in Q1 FY27.

Operating performance was even stronger. EBIT increased 40.5 per cent year-on-year to Rs 2,387 crore, with the EBIT margin improving to 14.8 per cent from 14.4 per cent in the previous quarter. Tech Mahindra said this marked the 12th consecutive quarter of margin expansion, taking it closer to its stated 15 per cent EBIT margin target for FY27.

Deal Wins Remain a Key Positive

One of the biggest reasons behind the positive market reaction was the company's order pipeline.

Tech Mahindra reported new deal wins worth $1.023 billion during the quarter, up 25.4 per cent from $816 million in Q2 FY26. This was the fourth consecutive quarter in which the company secured more than $1 billion in new deal wins.

On a trailing 12-month basis, deal wins stood at $4.27 billion, up 34.8 per cent year-on-year. The strong deal flow gives the company better visibility on future revenue as large contracts move into the execution phase. 

Communications remained an important growth driver, supported by the ramp-up of large deals. The company also saw growth across several other verticals, although manufacturing was affected by the completion of a large European automotive programme in the previous quarter. 

Revenue Beat Estimates, While Profit Expectations Were Mixed

The quarterly numbers were not a clean beat across every measure. Tech Mahindra's revenue came in ahead of analyst expectations, while profit was above some polls but below estimates from some brokerages.

Reuters reported that Q2 revenue of Rs 16,180 crore was above the LSEG analyst estimate of around Rs 15,195 crore. Moneycontrol, meanwhile, noted that the company's Rs 1,586 crore profit was slightly ahead of its CNBC-TV18 poll estimate of Rs 1,576 crore. 

This distinction is important because the market's strong reaction appears to be driven less by the headline profit number and more by the combination of revenue growth, margin expansion and sustained deal momentum.

1:1 Bonus Issue and Rs 15 Dividend Add to Investor Interest

Tech Mahindra also announced two shareholder-friendly measures alongside its Q2 results.

The board recommended a 1:1 bonus issue, under which shareholders would receive one new fully paid-up equity share for every existing share held, subject to shareholder approval.

The company also declared an interim dividend of Rs 15 per share for FY27. The record date has been fixed for October 23, 2026, with the dividend scheduled to be paid by November 13. 

The bonus issue is particularly notable because Tech Mahindra has not announced one since 2015. The move also comes as the company marks its 40th anniversary. 

Brokerages Turn More Positive on Growth Outlook

The strong operating performance has also prompted several brokerages to reassess their outlook on the stock.

Prabhudas Lilladher retained its Buy rating and raised its target price to Rs 1,910 from Rs 1,900, citing the revenue and margin performance, strong deal momentum and improving growth visibility.

Nuvama has also maintained its Buy rating with a target price of Rs 1,950, while Morgan Stanley upgraded Tech Mahindra from Underweight to Equal-weight and raised its target from Rs 1,480 to Rs 1,780. CLSA, however, remained cautious with a Hold rating and a Rs 1,494 target. 

The difference in brokerage views shows that while Tech Mahindra's business momentum has improved, the stock's valuation remains an important consideration after the sharp rally.

Tech Mahindra's Growth Story Is Gaining Momentum

The latest quarter strengthens the case that Tech Mahindra's turnaround is moving into a stronger growth phase. Revenue growth has picked up, margins are nearing the company's 15 per cent target and deal wins have remained consistently above $1 billion.

The company is also increasing its focus on AI-led solutions and productivity improvements. However, investors will be watching closely to see how quickly the large deal pipeline converts into revenue and whether margin expansion can continue without putting pressure on investments and employee costs.

Disclaimer: The article is for informational purposes only and not investment advice.