Is Tech Mahindra overvalued or undervalued?

Jun 29 2025 08:01 AM IST
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As of June 27, 2025, Tech Mahindra is considered overvalued with a PE ratio of 38.58, significantly higher than its peers TCS and Infosys, despite strong growth potential and a robust ROCE of 23.28%, suggesting caution for potential investors.
As of 27 June 2025, Tech Mahindra's valuation grade has moved from very expensive to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued. Key ratios include a PE ratio of 38.58, an EV to EBITDA of 22.78, and a PEG ratio of 0.48, which suggest that while the company has strong growth potential, its current price does not adequately reflect its earnings relative to its peers.

In comparison to its industry peers, Tech Mahindra's PE ratio is significantly higher than TCS at 25.66 and Infosys at 25.02, both of which are rated more favorably. Additionally, while Tech Mahindra has a robust ROCE of 23.28%, the high valuation ratios indicate that the stock may not be a prudent investment at this time. Despite a strong 1-year return of 16.97%, which outperformed the Sensex's 6.08%, the overall valuation metrics suggest caution for potential investors.
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