Tech Mahindra hits fresh 52-week low

The stock is down nearly 2% at Rs 464, extending its past week's 10% decline on the NSE.

Shares of Tech Mahindra were down nearly 2% at Rs 464, extending their past week's 10% decline on the NSE, after the company warned that a seasonally weak mobility business and visa costs would impact its revenues in the April-June quarter.

The stock opened at Rs 465 and touched a fresh 52-week low of Rs 459 on the NSE in intra-day deals.

“Q1 FY16 has some headwinds and tailwinds, which could see a risk of marginal decline in both revenue and earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin on a sequential basis,” Tech Mahindra said in a regulatory filing.

The company said that it expected the margins to improve only by the third quarter of the current financial year.

Antique Stock Broking expects a sharp decline in Comviva revenues and higher visa costs to result in a 50-basis points (bps) decline in EBITDA margin in 1QFY16.

“We expect Tech Mahindra to report a 0.3% revenue decline in 1QFY16e. Though revenues are likely to be positively impacted by full consolidation of SOFGEN (incremental USD 7- 8m), seasonally weak revenues in Comviva and large client-related issues are likely to impact growth,” an analyst at Antique Stock Broking said in a results preview.

“We expect the company to register 0.4% quarter-on-quarter (QoQ) decline in USD revenues and EBITDA margin to drop by 30bps to 14.9%,” according to an analyst at Edelweiss Securities.

We believe investors will keenly monitor commentary on deal pipeline in telecom, integration roadmap of acquired companies and margin improvement timeline. While the company is grappling with near-term issues, the long-term story based on digital and network management remains intact, the report added.

At 1458 hours, the stock was down 1.3% at Rs 465 on the NSE with a combined 2.8 million shares changing hands on the counter on the NSE and BSE.