According to Kotak Institutional Equities, TCS has witnessed a significant correction of 17% in the last three months and 22% over the past six months. The stock is now trading at a 23x forward multiple, a valuation level last seen before the COVID-19 pandemic.
Given this, the brokerage firm sees TCS as an attractive investment opportunity despite a cautious near-term growth outlook. While upgrading the stock to “buy,” Kotak has revised its target price downward to ₹4,100 per share, anticipating a year of below-normal growth.
Kotak Institutional Equities has also upgraded Tech Mahindra to “buy” with a target price of ₹1,800 per share. The brokerage firm sees the stock as a turnaround play at reasonable valuations, trading at 19x its projected FY27 earnings.
They concur with the company’s new management’s goal of improving margins to 15% by FY27. Currently, Tech Mahindra is expected to close this fiscal year (FY25) with margins of around 9.5-10%, but Kotak Institutional Equities remains optimistic about the company’s ability to meet its targets.
On Monday, TCS and Tech Mahindra saw modest gains, rising 0.65% and 0.25%, respectively, to close at ₹3,506 and ₹1,491.50 per share. However, both stocks have been under pressure over the past six months, with TCS down about 22% and Tech Mahindra declining around 6%.
(Edited by : Ajay Vaishnav)