Tech Mahindra, the Pune-headquartered information technology (IT) services company, is scheduled to release its third quarter (Q3FY25) earnings on Friday, January 17, 2025.
Brokerages tracked by Business Standard estimate the revenue of Tech Mahindra to grow by 1.7 per cent year-on-year (Y-o-Y), on an average, to Rs 1,332.86 crore as compared to Rs 1,310 crore a year ago. On a quarter-on-quarter (Q-o-Q) basis, revenue is forecasted to grow marginally by 0.21 per cent.
The revenue is likely to be impacted by furloughs and weakness in the manufacturing segment which will be mitigated partially by positive seasonality in the Comviva business.
Adjusted profit after tax (PAT) for the IT company for the quarter ended December 31, 2024, is estimated at an average of Rs 102.5 crore, an increase of 38 per cent as compared to Rs 72 crore a year ago. However, on a quarterly basis, the adjusted PAT is expected to decline at an average of 18 per cent.
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Analysts say investors should focus on the management's commentary on the outlook on margin and growth in the Communications, Media, and Entertainment (CME) and Banking and Financial Services (BFS) verticals.
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Here's how brokerages expect Tech Mahindra to fare in Q3:
PL Capital: The brokerage expects Tech Mahindra to report muted growth of 0.4 per cent Q-o-Q constant currency (CC) and with a currency headwind of 80 basis points (bps) they expect the US dollar revenue to decline by 0.4 per cent Q-o-Q.
As per the analysts at PL Capital, Q3 revenue performance will be impacted by furloughs & weakness in the manufacturing segment which will be mitigated partially by positive seasonality in Comviva business.
They expect Earnings before interest and tax (Ebit) margin to improve by 80 bps Q-o-Q due to the benefits of Project Fortius and the delay of wage hike by the company. Deal wins are likely to improve sequentially.
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The Ebit for the third quarter is expected at Rs 139 crore as compared to Rs 91 crore a year ago and Rs 128 crore in Q2FY25. Further, the Ebit margin is estimated at 10.4 per cent as compared to 7 per cent a year ago and 9.8 per cent in Q2.
Motilal Oswal: The brokerage expects a steady deal of total contract value (TCV) in Q3, driven by a slight improvement in the demand environment. Analysts at Motilal expect Ebit margins to be flat Q-o-Q at 9.7 per cent as compared to 9.6 per cent in Q2. They also expect cost control efforts under Project Fortius, to be offset by the impact of furloughs and currency headwinds.
HDFC Securities: As per the brokerage, Tech Mahindra is expected to post 0.7 per cent Q-o-Q CC. Analysts anticipate Ebit to grow 4.1 per cent Q-o-Q to Rs 133.3 crore and 89.7 per cent Y-o-Y. Ebit margin for the quarter ended December 31, 2024, is likely at 9.9 per cent a rise of 31 bps Q-o-Q and 456 bps Y-o-Y.