Tech Mahindra reported lower than expected numbers for Q1FY20 on all fronts. Revenues declined by 2.7% qoq to Rs8,653cr against median consensus estimate of Rs8,733cr. Revenue in dollar terms declined by 1.6% qoq to USD1,247mn. EBIT came in at Rs993cr, down 27.4% qoq against median consensus estimate of Rs1,162cr. EBIT margin contracted by 392bps qoq to 11.5%. PAT declined by 15.3% qoq to Rs959cr against median consensus estimates of Rs981cr.
Revenue grew by 3.7% yoy in constant currency terms.
Revenue decline was on account of Enterprise business declining by ~1% qoq, while the decline was higher in Telecom business, down by 3.2% qoq.
Enterprise business was impacted by decline in Manufacturing (-5.5% qoq) and BFSI (-3.9% qoq). Retail, transport, logistics was down by 4.7% qoq cc. Other has rebounded on slightly depressed base posting 14.8% qoq growth.
Geographically, Americas (+0.9% qoq) posted growth, while Europe (-5.0% qoq) caused the decline along with RoW (-2.0% qoq).
Top 5 clients declined by 7.7% qoq, which are likely telecom clients and from Europe. Growth was weak across Top 20 clients (-4.9% qoq cc, sans Top 6-10 clients only declined by 0.5% qoq). Clients outside Top 20 grew by 1.1% qoq.
Utilization including trainees (82%) and Attrition (21.0%) were flat on qoq basis.
Clients in >US$5 mn bucket increased by 4, >US$10 mn declined by 2, >US$20 mn declined by 1 and >US$50 mn increased by 1, on qoq basis.
Tech Mahindra Ltd ended at Rs. 640.30, down by 6 points or 0.93% from its previous closing of Rs. 646.30 on the BSE.
The scrip opened at Rs. 645 and touched a high and low of Rs. 650.50 and Rs. 633.30 respectively. A total of 55,69,166 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.
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