Q3FY23 Preview: Tech Mahindra: Revenue seen at Rs135,508 million, PAT at Rs12,372 million

27 Jan 2023 , 03:46 PM

Result date: 30^th January, 2023

Recommendation: Add

Target price: Rs1,060

Analysts at IIFL Capital Services are forecasting slowest revenue growth among large caps of 0.8% cc QoQ (+0.6% QoQ) for Tech Mahindra, as broad-based slowdown across segments could offset positive seasonality of Retail BPO and Comviva business. Deal wins in Q3 are also likely to highlight the impact of weakening macro. 

Analysts at IIFL Capital Services expect margins to expand by 60 bps sequentially, as the company continues to rationalize lower margin business. They expect FY23 EBIT margins to be under 13%. 

Profit After Tax or PAT of Tech Mahindra could decline 5.5% sequentially.

Important management insights to watch out for:

• Deal wins, including color on 5G deal
• Revenue and margin outlook for CY23
• Comments on capital allocation and integration of acquisitions
• Supply-side and attrition trends, sub-contracting costs and employee additions

 

	December 2022 estimates	QoQ change	YoY change
Revenue (US$ mn)	1,648	0.6%	7.4%
Revenue (Rs. mn)	135,508	3.2%	18.3%
EBIT (Rs. mn)	16,222	8.7%	(4.5)%
EBIT margin	12.0%	60 bps	(290) bps
Profit After Tax (Rs. mn)	12,372	(5.5)%	(9.6)%
EPS (Rs.)	14.0	(5.5)%	(9.6)%

Source: IIFL Research