Posted on February 28, 2025, by Niftynews
Tech Mahindra shares plunged by 5% on February 28, 2025, pushing the stock price down to ₹1,514.3. This significant drop contributed to the broader BSE IT Index, which also saw a decline of 3.5%, bringing it to 36,912.0 points. The downturn in the Tech Mahindra share price reflects a challenging environment in the IT sector, affecting several prominent companies in the space.
Impact on the IT Sector: Tech Mahindra Leads the Way
Tech Mahindra sharp decline comes amid a broader slump in the BSE IT Index, which tracks the performance of India’s top IT companies. Among the top losers within the BSE IT Index today, Zensar Technologies saw a drop of 5.2%, while Persistent Systems lost 4.9%. Despite this, Happiest Minds Technologies was one of the few stocks bucking the trend, gaining 2.2% during the same period.
Looking at Tech Mahindra performance over the past year, the stock has registered an overall gain of 16.7%, rising from ₹1,297.8 to ₹1,514.3. However, the BSE IT Index, which tracks the broader IT sector, has faced a decline of 3.4% over the same period. This highlights how the IT sector as a whole has struggled despite isolated successes.
Broader Market Trends: The Sensex and Nifty Indices
The BSE Sensex mirrored the trend seen in the BSE IT Index, falling by 1.2% to 73,691.3. The biggest losses on the Sensex came from IndusInd Bank, which dropped 4.7%, and M&M, which saw a 3.9% decrease in share price. Similarly, the NSE Nifty declined by 1.4%, with IndusInd Bank and M&M again being the main contributors to the losses.
In contrast to the IT sector’s struggles, Zomato and Tata Steel emerged as the most traded stocks in the BSE Sensex, signaling that other sectors were performing relatively better.
Tech Mahindra Financials: A Mixed Outlook
Despite today’s sharp decline, Tech Mahindra shares have shown impressive performance in certain areas. The company reported a 89.3% year-on-year (YoY) increase in net profit for Q3 FY25, which surged to ₹9,822 million from ₹5,189 million in Q3 FY24. Additionally, the company’s net sales rose by 1.4%, reaching ₹132,856 million during the same period.
However, for the year ending FY24, Tech Mahindra faced significant challenges, reporting a 50.7% decrease in net profit, which fell to ₹23,968 million from ₹48,570 million in FY23. Revenue for the same period also declined by 2.4%, totaling ₹519,955 million.
Tech Mahindra Valuation: Understanding the P/E Ratio
The current Price to Earnings (P/E) ratio of Tech Mahindra is 39.4, based on rolling 12-month earnings. This ratio suggests that investors are still paying a premium for the company’s stock despite the recent slump, possibly due to its strong historical performance and future growth potential.
What’s Next for Tech Mahindra Shares?
The Tech Mahindra share price and the broader BSE IT Index will likely continue to be affected by market conditions, global economic factors, and the company’s ability to navigate its operational challenges. Investors should closely monitor Tech Mahindra’s upcoming quarterly earnings reports and any developments related to the broader IT sector to understand if the current downturn is part of a short-term correction or a more sustained trend.
Conclusion: Tech Mahindra and the IT Sector Outlook
The recent 5% drop in Tech Mahindra shares and the broader BSE IT Index decline indicate a tough environment for India’s IT sector. While Tech Mahindra has demonstrated impressive growth in some areas, its recent financial performance suggests that the company and the sector may face challenges in the near future. Investors should be cautious and consider all market factors before making any decisions regarding Tech Mahindra shares.
