February 15, 2024
Top 10 Stock Tech Mahindra Sell 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 February 15, 2024 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 6 (6% performer), Obermatt issues an overall sell recommendation for Tech Mahindra on February 15, 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 Sell
| 360 METRICS | February 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 72 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 45 |
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| SENTIMENT | ||||||||
| SENTIMENT | 6 |
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| 360° VIEW | ||||||||
| 360° VIEW | 6 |
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ANALYSIS: With an Obermatt 360° View of 6 (better than 6% compared with alternatives), overall professional sentiment and financial characteristics for the stock Tech Mahindra are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Tech Mahindra. Only the consolidated Value Rank has an attractive rank of 72, which means that the share price of Tech Mahindra is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 72% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 15, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 45, meaning the company has a riskier financing structure than 55% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 94% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 6. ...read more
RECOMMENDATION: With a consolidated 360° View of 6, Tech Mahindra is worse than 94% of all alternative stock investment opportunities based on the Obermatt Method. This means that Tech Mahindra shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 72. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 15), a riskier financing structure than the competition (Safety Rank of 45), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 6) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Tech Mahindra is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Tech Mahindra. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Tech Mahindra negative
ANALYSIS: With an Obermatt Sentiment Rank of 6 (better than 6% 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 half of the metrics below and half above average for Tech Mahindra. Analyst Opinions are at a rank of 27 (worse than 73% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 8 which means that stock research experts are getting even more pessimistic. It doesn't end with the analysts. Market Pulse is also low with a rank of 36, which means that the current professional news and professional social networks are on the negative side when discussing this company (more negative news than for 64% of competitors). No wonder, the Professional Investors rank is only 8, which means that professional investors hold less stock in this company than in 92% of alternative investment opportunities. Pros tend to stay away from Tech Mahindra, which may be due to a small company size but just as likely because of its relatively low Sentiment Rank. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 6 (less encouraging than 94% compared with investment alternatives), Tech Mahindra has a reputation among professional investors that is far below that of its competitors. Investors should be careful with this stock right now. Further research is required if an investment is desired, because the facts found in the professional community are all negative. ...read more
Value Strategy: Tech Mahindra Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 72 (better than 72% compared with alternatives), Tech Mahindra shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Tech Mahindra. Price-to-Sales (P/S) is 57, which means that the stock price compared with what market professionals expect for future sales is lower than for 57% of comparable companies, indicating a good value concerning Tech Mahindra's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 52% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 80 (dividends are expected to be higher than 80% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 55% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Tech Mahindra to 45. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 72, is a buy recommendation based on Tech Mahindra's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Tech Mahindra Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 15 (better than 15% compared with alternatives), Tech Mahindra shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Tech Mahindra. Capital Growth has a rank of 52, which means that currently professionals expect the company to grow its invested capital more than 4% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 77 (above 77% of alternative investments). But Sales Growth has only a rank of 10, which means that, currently, professionals expect the company to grow less than 90% of its competitors, and Profit Growth is also low at a rank of 4. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 15, is a sell recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Tech Mahindra, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: Tech Mahindra Debt Financing Safety below-average
| SAFETY METRICS | February 15, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 58 |
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| REFINANCING | ||||||||
| REFINANCING | 42 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 54 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 45 |
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ANALYSIS: With an Obermatt Safety Rank of 45 (better than 45% compared with alternatives), the company Tech Mahindra has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Tech Mahindra is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, 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 54, meaning the company generates more profit to service its debt than 54% 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 42, 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 58% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 45 (worse than 55% compared with alternatives), Tech Mahindra has a financing structure that is riskier 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 Below-Average Financial Performance
| COMBINED PERFORMANCE | February 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 72 |
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| GROWTH | ||||||||
| GROWTH | 15 |
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| SAFETY | ||||||||
| SAFETY | 54 |
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| COMBINED | ||||||||
| COMBINED | 29 |
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ANALYSIS: With an Obermatt Combined Rank of 29 (worse than 71% compared with investment alternatives), Tech Mahindra (IT Consulting & oth. Services, India) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Tech Mahindra are a good value (attractively priced) with a consolidated Value Rank of 72 (better than 72% of alternatives) but show below-average growth (Growth Rank of 15), and are riskily financed (Safety Rank of 45), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 29, is a hold recommendation based on Tech Mahindra's financial characteristics. As the company Tech Mahindra's key financial metrics exhibit good value (Obermatt Value Rank of 72) but low growth (Obermatt Growth Rank of 15) and risky financing practices (Obermatt Safety Rank of 45), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 72% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
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