 "Tech Mahindra surges 6% as June quarter earnings beat Street estimates")
Shares of Tech Mahindra gained as much as 6 per cent to Rs 702 on the BSE on Tuesday after the company's April-June quarter (Q1FY21) earnings beat Street estimate.
The IT services firm's revenues declined 6.7 per cent quarter on quarter (QoQ) to US $ 1,207.5 million. However, they were above the estimates by analysts and brokerages who had estimated a decline of 8.3 per cent sequentially. The company reported profit before tax (PBT) of Rs 1,283 crore, up 32.9 per cent sequentially. Its consolidated net profit grew 20.9 per cent on a QoQ basis at Rs 972 crore.
Operating margin expanded by 10 basis points (bps) to 14.3 per cent on a sequential basis. New deal wins stood at $290 million during the quarter under review.
Going forward, ICICI Securities expects a ramp up of large deals won in the previous quarters and improvement in deal wins in coming quarters to drive Tech Mahindra's revenues.
“Further, in the long term, we believe its leadership in the communication vertical will make it a key beneficiary of vendor consolidation in the segment. It would also benefit from 5G opportunities. Enterprise segment will also benefit from improved digital traction and success in large deals. Hence, we remain positive on the stock,” the brokerage firm said in results update.
“Understandably, net new deal wins (US$ 290 million) were weaker than the usual run-rate. Despite the elongated decision-making cycles, the company hinted at improving deal pipeline. Revenue and margins are expected to improve from hereon,” Motilal Oswal Securities said in Q1 results update.
The relatively higher client concentration and the resultant impact on pricing and working capital were key concerns initially. However, management commentary suggests that these are not insurmountable. Ramp-up in recently won mega deals was largely on track, a key positive, it adds.
At 09:50 am, the stock was trading 4 per cent higher at Rs 688 on the BSE, as compared to 0.45 per cent rise in the S&P BSE Sensex. A combined 11.3 million equity shares had changed hands on the counter on the NSE and BSE till the time of filing this report.
The IT services firm's revenues declined 6.7 per cent quarter on quarter (QoQ) to US $ 1,207.5 million. However, they were above the estimates by analysts and brokerages who had estimated a decline of 8.3 per cent sequentially. The company reported profit before tax (PBT) of Rs 1,283 crore, up 32.9 per cent sequentially. Its consolidated net profit grew 20.9 per cent on a QoQ basis at Rs 972 crore.
Operating margin expanded by 10 basis points (bps) to 14.3 per cent on a sequential basis. New deal wins stood at $290 million during the quarter under review.
Going forward, ICICI Securities expects a ramp up of large deals won in the previous quarters and improvement in deal wins in coming quarters to drive Tech Mahindra's revenues.
“Further, in the long term, we believe its leadership in the communication vertical will make it a key beneficiary of vendor consolidation in the segment. It would also benefit from 5G opportunities. Enterprise segment will also benefit from improved digital traction and success in large deals. Hence, we remain positive on the stock,” the brokerage firm said in results update.
“Understandably, net new deal wins (US$ 290 million) were weaker than the usual run-rate. Despite the elongated decision-making cycles, the company hinted at improving deal pipeline. Revenue and margins are expected to improve from hereon,” Motilal Oswal Securities said in Q1 results update.
The relatively higher client concentration and the resultant impact on pricing and working capital were key concerns initially. However, management commentary suggests that these are not insurmountable. Ramp-up in recently won mega deals was largely on track, a key positive, it adds.
At 09:50 am, the stock was trading 4 per cent higher at Rs 688 on the BSE, as compared to 0.45 per cent rise in the S&P BSE Sensex. A combined 11.3 million equity shares had changed hands on the counter on the NSE and BSE till the time of filing this report.
One subscription. Two world-class reads.
Already subscribed? Log in
Subscribe to read the full story →*Subscribe to Business Standard digital and get complimentary access to The New York Times
Smart Quarterly
₹900
3 Months
₹300/Month
SAVE 25%
Smart Essential
₹2,700
1 Year
₹225/Month
SAVE 46%
*Complimentary New York Times access for the 2nd year will be given after 12 months
Super Saver
₹3,900
2 Years
₹162/Month
Subscribe
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Exclusive premium stories online
Over 30 premium stories daily, handpicked by our editors
Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share
Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor
Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements
Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app
SAVE 25%