Is Tech Mahindra overvalued or undervalued?
As of July 21, 2025, Tech Mahindra is considered overvalued with a PE ratio of 33.29 and an EV to EBITDA of 19.87, significantly higher than its peers, despite a strong long-term return of 148.65% compared to the Sensex's 116.71%.
As of 21 July 2025, the valuation grade for Tech Mahindra has moved from fair to expensive, indicating that the company is currently overvalued. The key ratios supporting this assessment include a PE ratio of 33.29, an EV to EBITDA ratio of 19.87, and a Price to Book Value of 5.52. Compared to its peers, Tech Mahindra's valuation appears high; for instance, TCS has a PE ratio of 23.19 and EV to EBITDA of 16.36, while HCL Technologies shows a PE of 24.46 and EV to EBITDA of 15.26.In light of these metrics, Tech Mahindra is deemed overvalued relative to its industry peers. Although the company has shown strong returns over the long term, with a 5-year return of 148.65% compared to the Sensex's 116.71%, the recent performance has been lackluster, with a year-to-date decline of 9.49% against the Sensex's gain of 5.20%. This further reinforces the conclusion that Tech Mahindra's current market price does not align with its financial fundamentals.
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