Tech Mahindra surges 9 percent on appointing Mohit Joshi as MD & CEO

Mohit will takeover the role of CEO and MD after CP Gurnani announces his retirement on December 19, 2023. Mohit's joining date was not mentioned in the press release. He is finishing his tenure at Infosys on June 9, 2023.

“Appointment of Mr. Mohit Joshi is or a period of 5 (five) years from December 20, 2023 to December 19, 2028 (both days inclusive), Tech Mahindra said in the exchange filing.

Mohit Joshi joins the company from Infosys, where he is currently company president. Mohit brings more than two decades of enterprise technology software and consulting experience and has worked with the world's largest companies driving digital transformation and building thriving businesses.

At Infosys, Mohit is the head of the global financial services, healthcare and software business, which includes Finacle (the banking platform) and the AI/Automation portfolio, Tech Mahindra said.

According to ICICI Securities, Mohit Joshi should come on board well early for a smooth transition, which would be in line with Gurnani's comments at a recent analyst meeting.

"We may see the next medium-term gains from Mohit joining tech vertical Mahindra BFSI (1bn dollars YOY, 16 percent mix) which has seen some sequential declines over the past five quarters, and it's likely we'll see some arrests over there", said the brokerage firm in their note.

He also stated that Tech Mahindra expects exponential growth in the healthcare and life sciences segment (included in "other" vertical disclosures and currently with just over 600 million dollars in annual revenue) as it targets this segment to reach 1 billion dollars in revenue in the next two to three years, and Mohit's experience there can help achieve the same.

The company is betting big on the platform business (450 million dollars annual revenue) as it expects to generate up to 1 billion dollars in revenue over the next three years as its experience in the platform business is likely to benefit the platforms. We think there is a range for Tech Mahindra's current valuation discount of 40-50 percent for Infy/TCS to lower in the future, but we think that will only happen gradually (such as when acceleration is visible in their numbers). and we don't do that,” ICICI Securities said. On a side note, this is an immediate possibility.

Motilal Oswal Financial Services (MOFSL) believes this is a positive for Tech Mahindra as it will help the company expand its BFSI vertical, which has lagged behind its peers in recent years. In addition, Mohit enjoys a generally good reputation in the industry and could help modernize the company's go-to-market approach, which has also lagged behind its peers.

On the other hand, we will closely monitor any decline in leadership at the company, which could have a short-term negative impact on your business. Furthermore, we expect growth and margins to remain under pressure in the near term at Tech Mahindra. You will observe the clarity in case of a trend change. “We reiterate our Neutral rating on the stock,” the Department of State and Security said in an industry update.