Tech Mahindra Ltd, under the leadership of Mohit Joshi, is expected to report a 45% year-on-year drop in profit for the December quarter. This decline is attributed to a 5-7% de-growth in sales. However, analysts anticipate a sequential expansion in margins due to the absence of one-time costs, as seen in the previous quarter.
Despite challenges in sectors like hi-tech, telecom, and financial services, there are positive factors such as a seasonal pick-up in Comviva and retail BPO, along with growth in the manufacturing segment. Analysts suggest that these factors could partially offset the headwinds in certain sectors.
The company’s deal wins are expected to be in the $400-500 million range, providing a boost to its overall performance. Investors are keenly awaiting updates on the telecom and enterprise demand outlook, 5G technology-related developments, new business total contract value (TCV) wins, and the overall deal pipeline.
Furthermore, attention is focused on the capital allocation policy and strategic roadmap under the newly appointed CEO designate. The organizational restructuring recently announced may lead to leadership exits, adding another layer of interest in the company’s direction under Mohit Joshi.
Kotak Institutional Equities emphasizes that quarterly financials may have limited impact in the short term, as the spotlight is on the turnaround efforts led by Mohit Joshi. The brokerage expects a potential reshaping of the leadership team due to the organizational changes.
Equirus Securities predicts a sharp 42.55% YoY drop in profit and a 6.5% YoY decline in sales. The expectation is for the company to report $1.54 billion in dollar revenue, down 0.9% quarter-on-quarter, influenced by ongoing softness in communication and enterprise segments.
Axis Securities, on the other hand, anticipiates a 0.5% QoQ revenue growth and an expansion in margin, attributing it to strong volume growth and portfolio reshuffling. The focus for investors here lies in deal TCVs, pipeline updates from the communication vertical, pricing scenarios, attrition rates, days sales outstanding (DSO), and commentary on the 5G rollout.
In conclusion, the market is closely monitoring Tech Mahindra’s performance, considering the challenges faced in specific sectors, the strategic initiatives under Mohit Joshi’s leadership, and the potential impact of organizational changes on the company’s future trajectory.
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