September 26, 2024
Top 10 Stock Tech Mahindra Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Tech Mahindra – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Tech Mahindra is listed as a top 10 stock on September 26, 2024 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. While the company shows high growth, the stock price is high yet professional investor sentiment is low, which may be due to overly optimistic investor behavior, reflected in a low stock price value. Based on the Obermatt 360° View of 50 (high 50% performer), Obermatt assesses an overall buy recommendation for Tech Mahindra on September 26, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | IT Consulting & oth. Services |
| Index | BSE Sensex, Good Governace Growth Markets, CNX Nifty 50 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Tech Mahindra Buy
| 360 METRICS | September 26, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 47 |
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| GROWTH | ||||||||
| GROWTH | 87 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| SENTIMENT | ||||||||
| SENTIMENT | 16 |
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| 360° VIEW | ||||||||
| 360° VIEW | 50 |
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ANALYSIS: With an Obermatt 360° View of 50 (better than 50% compared with alternatives), overall professional sentiment and financial characteristics for the stock Tech Mahindra are above average. The 360° View is based on consolidating four consolidated indicators, with half of the metrics below and half above average for Tech Mahindra. The consolidated Growth Rank has a good rank of 87, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. This means that growth is higher than for 87% of competitors in the same industry. In addition, the consolidated Safety Rank has a safer rank of 55 which means that the company has a financing structure that is safer than 55% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the consolidated Value Rank has a less desirable rank of 47 which means that the share price of Tech Mahindra is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is higher than for 53% of alternative stocks in the same industry. The consolidated Sentiment Rank also has a low rank of 16, which means that professional investors are more pessimistic about the stock than for 84% of alternative investment opportunities. ...read more
RECOMMENDATION: With a consolidated 360° View of 50, Tech Mahindra is better positioned than 50% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, the picture is ambiguous. Growth is above-average (Growth Rank of 87), and the company is safely financed (Safety Rank of 55). However, professional market sentiment is low(Sentiment Rank of 16). The negative market view on Tech Mahindra may be due to the high stock price (low value). A growth company like this may get too expensive at one point in time. If too many investors are desperate to board the train, they may drive stock prices above reasonable levels. It is typical for growth companies to have low value ratings, because investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Tech Mahindra compared with alternatives? You can use the following rule of thumb: The value rank shouldn’t be lower than one hundred minus the growth rank. For example, if the growth rank is at 75, and the value rank is at 5, you should tread carefully. If the value rank is at 40, it still might be a good value if the value rank is above 60. As market sentiment is low, you should be careful with paying more than market-average for this stock and conduct further research into the company’s future growth potential. ...read more
Sentiment Strategy: Professional Market Sentiment for Tech Mahindra negative
ANALYSIS: With an Obermatt Sentiment Rank of 16 (better than 16% compared with alternatives), overall professional sentiment and engagement for the stock Tech Mahindra is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Tech Mahindra. Analyst Opinions are at a rank of 28 (worse than 72% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 50, which means that stock research experts have found something to make them more positive about investing in the company. In other words, they are getting more optimistic of stock investments in Tech Mahindra. But the Professional Investors rank is low at 32, which means that professional investors hold less stock in this company than in 68% of alternative investment opportunities. Pros tend to invest in other companies. Market Pulse is also low at a rank of 41, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 59% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 16 (less encouraging than 84% compared with investment alternatives), Tech Mahindra has a reputation among professional investors that is far below that of its competitors. These are quite a few negative sentiment signals. One may want to trust the analysts that are changing their opinions. They may be early indications of better times, especially if the company is a smaller one. But If they are an extra large company, they should have more professional stockholders than are currently present. ...read more
Value Strategy: Tech Mahindra Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 47 (worse than 53% compared with alternatives), Tech Mahindra shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, where half the indicators are below and half above average for Tech Mahindra. Price-to-Sales (P/S) is 53, which means that the stock price compared with what market professionals expect for future sales is lower than for 53% of comparable companies, indicating a good value concerning Tech Mahindra's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 76, which means that dividends are expected to be higher than for 76% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 63% of alternatives (only 37% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 63% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 47, is a hold recommendation based on Tech Mahindra's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. ...read more
Growth Strategy: Tech Mahindra Growth Momentum high
| GROWTH METRICS | September 26, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 31 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 94 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 78 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 67 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 87 |
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ANALYSIS: With an Obermatt Growth Rank of 87 (better than 87% compared with alternatives) for 2024, Tech Mahindra shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Tech Mahindra. Profit Growth has a rank of 94 which means that currently professionals expect the company to grow its profits more than 94% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 78, and Stock Returns has a rank of 67 which means that the stock returns have recently been above 67% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 31 (69% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 87, is a buy recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Tech Mahindra Debt Financing Safety above-average
| SAFETY METRICS | September 26, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 58 |
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| REFINANCING | ||||||||
| REFINANCING | 39 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 73 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 55 |
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ANALYSIS: With an Obermatt Safety Rank of 55 (better than 55% compared with alternatives), the company Tech Mahindra has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Tech Mahindra is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Tech Mahindra. Leverage is at a rank of 58, meaning the company has a below-average debt-to-equity ratio. It has less debt than 58% of its competitors. Liquidity is also good at a rank of 73, meaning the company generates more profit to service its debt than 73% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 39, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 61% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 55 (better than 55% compared with alternatives), Tech Mahindra has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Tech Mahindra. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Tech Mahindra Top Financial Performance
| COMBINED PERFORMANCE | September 26, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 47 |
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| GROWTH | ||||||||
| GROWTH | 87 |
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| SAFETY | ||||||||
| SAFETY | 73 |
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| COMBINED | ||||||||
| COMBINED | 86 |
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ANALYSIS: With an Obermatt Combined Rank of 86 (better than 86% compared with investment alternatives), Tech Mahindra (IT Consulting & oth. Services, India) shares have much better financial characteristics than comparable stocks. Shares of Tech Mahindra are low in value (priced high) with a consolidated Value Rank of 47 (worse than 53% of alternatives). But they show above-average growth (Growth Rank of 87) and are safely financed (Safety Rank of 55, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 86, is a strong buy recommendation based on Tech Mahindra's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Tech Mahindra exhibits low value (Obermatt Value Rank of 47), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 87). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 55) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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