Q1FY24 Preview: Tech Mahindra: Revenue seen at Rs. 133,556 million, PAT at Rs. 10,319 million

24 Jul 2023 , 06:13 PM

Result date: 26^th July, 2023

Recommendation: Reduce

Target price: Rs. 1,000 

Analysts at IIFL Capital Services expect Tech Mahindra’s revenues to decline 2.7% cc sequentially, due to broad-based demand slowdown across verticals and continued top client weakness. Deal wins in Q1 will probably continue to be weak, which could hurt near-term growth. 

Tech Mahindra’s margins could contract by 120 basis points sequentially, due to revenue decline, impact of Comviva, visa and partial wage hikes. 

The company’s Profit After Tax (PAT) is expected to decline 19.2% sequentially.

Important management insights to watch out for:

• Key priorities for new CEO
• Commentary on revenue and margin outlook for FY24
• Deal win quantum and nature combined with the pipeline
• Supply-side and attrition trends, sub-contracting costs and employee additions

	June 2023 estimates	QoQ change	YoY change
Revenue (US$ mn)	1,624	(2.6)%	(0.5)%
Revenue (Rs. mn)	133,556	(2.6)%	5.1%
EBIT (Rs. mn)	13,420	(12.3)%	(4.4)%
EBIT margin	10.0%	(110) bps	(100) bps
Profit After Tax (Rs. mn)	10,319	(19.2)%	(8.8)%
EPS (Rs.)	11.7	(19.2)%	(8.8)%

Source: IIFL Research