Shares of Tech Mahindra rallied nearly 10% to ₹1,164 apiece on the BSE in Monday's early trading session after the company

announced the appointment of Mohit Joshi as the new MD & CEO as CP Gurnani, retires on December 19, 2023.

Mohit Joshi will join well before that date to allow sufficient transition time, as per Tech Mahindra. He may join in June 2023 given Infosys has announced his resignation effective March 11

2023 and that he will be on leave from this date and his last day would be June 9, 2023 at Infosys

"The appointment of Mr Mohit Joshi clearly signals a change in strategy for TechM given his non-telecom background. That said

we believe the new CEO would need to do lot of work to turn around TechM’s operations. Accordingly, in the meantime, TechM might underperform peers

We expect the stock to underperform (relatively) over near to medium term. TechM’s inexpensive valuation and high dividend yield limit the downside potential though

said brokerage Nuvama which has maintained ‘HOLD’ rating on the IT stock with a target price of ₹1,090 apiece.

With the announcement of the CEO-designate, the company and the CEO-designate face the real challenge, as per analysts

who believe Mohit has his task cut out in terms of taking TechM back to delivering industry-average growth rate on a consistent basis,

diversifying the revenue base and focusing on growing the enterprise business, and improving the company’s operations to lift margins in line with large-cap peers’.

“Market may react positively in anticipation of new strategy roll-out by the new CEO to revive the performance of Tech Mahindra. However,

we do not believe that the leadership change can materially change the earnings fundamentals of the company in the medium term (2-3 years)

 reviving growth fundamentals is likely to be a gradual process," ICICI Securities said in a note.

The brokerage has continued to maintain Reduce rating (TP: ₹971) on Tech Mahindra because we believe the company has

room for improving its digital capabilities and in order to revive growth it will have to invest in building digital capabilities.