The shares of Tech Mahindra, a provider of IT services, rose 10% in early trading despite the company's fourth-quarter sales and net profit decrease.

After CEO and MD Mohit Joshi revealed a three-year turnaround plan to address the company's sluggish business development, the stock price of the company jumped.Tech Mahindra's shares were up 8.13% at Rs 1,286.90 on the Bombay Stock Exchange (BSE) at 2:10 pm.

Brokerages are skeptical about the company's prospects despite the fact that its shares increased during intraday trade, citing concerns in the near term.

Brokerage house Motilal Oswal believes Tech Mahindra is making some positive strides.It is pleased with the new leadership and the company's attempts to improve, including the reorganization of business units, investments in key accounts, and the formation of specialized teams.

However, the brokerage is still being cautious. It will not re-rate Tech Mahindra unless it sees tangible outcomes from these improvements.The brokerage business stated that although the company wants to reach a 15% profit margin by FY27, it may be difficult to see a significant increase in earnings anytime soon in the absence of expansion and quick investments.

Motilal Oswal has a target price of Rs 1,210 apeice and a "neutral" rating for the company. In light of the Q4 performance, Ir has also modestly lowered its FY25/FY26 EPS expectations by 0-1%.Nuvama Institutional Equities, meanwhile, has kept its "reduce" recommendation on the shares despite appreciating the CMD's approach.

"While these targets are achievable, we argue the steps needed to achieve them will incur significant near-term pain," Nuvama wrote in a note.

"We are taking -2%/-1.5% out of FY25E and FY26E. The report stated, "We maintain our 'REDUCE' rating on the stock, valuing it at 16x FY26E PE and keeping the TP at Rs 1,000 unchanged."

Additionally, Centrum Broking kept a "reduce" rating on the shares, with a reduced target price of Rs 1,194.The brokerage emphasized issues with the short-term demand climate and customer pressure on discretionary expenditure. Additionally, the brokerage projects a moderate rebound in FY25, propelled by the expansion of previously inked agreements.

Tech Mahindra's net profit suffered during the final quarter of FY24, falling 41% year over year to Rs 664.2 crore from Rs 1,125 crore.

In the meantime, the company's overall sales for the March quarter, which came to Rs 12,871 crore, down 6.2% from the same period the previous year.