On Thursday, Tech Mahindra will be one of the final two large-cap IT firms to release its March quarter results. Revenue growth is anticipated to remain subdued due to challenges with a few of our major clients.
In both rupee and dollar terms, Tech Mahindra’s sales growth would remain constant, according to a CNBC-TV18 study. Operating profit and margin are likewise expected to move very little sequentially.
The run-rate for Tech Mahindra’s transaction wins over the next five quarters, according to brokerage company CLSA, is anticipated to decrease below $700 million.
Due to delays in transaction closes, JM Financial predicted that contract wins would fall between the $500 million to $700 million range rather than the indicated band of $700 million to $1,000 million.
Due to the issues previously mentioned with some of the company’s most important clients, Tech Mahindra’s revenue is projected to decrease by 0.4 percent in constant currency terms. Due to this, revenue only increased by 0.2 percent in constant currency in the December quarter.
The margin for the quarter is probably going to stay flat since the drop in sales will outweigh the favorable effects of the currency tailwind and supply-side rationalization on the margin.
When it comes to the outlook for the top clientele, care is necessary. In the December quarter, revenue from the top five clients fell 15.2 percent annually and 4.8 percent sequentially. The management explained the reduction by pointing to challenges in a few clients brought on by internal reorganization
The management anticipates that these problems will stabilize this quarter, making the revenue growth and exit margin forecasts for the fiscal year 2024 particularly important.
On December 19, 2023, current MD and CEO CP Gurnani will leave the organization. Former Infosys President Mohit Joshi will assume control.
The CEO’s pick signals a shift in Tech Mahindra’s emphasis away from telecom as the primary business engine and more towards the non-telecom market. The CME sector accounts for about 40% of Tech Mahindra’s revenue.
Two straight downgrades from JPMorgan and Citi earlier this month for Tech Mahindra were caused by the company’s exposure to the communications sector.
Year to date, shares of Tech Mahindra have remained unchanged. The stock is now 5 percent above its Rs 944 52-week low.