Q3FY24 Preview: Tech Mahindra: Revenues seen at Rs. 127,000 million, PAT at Rs. 5,451 million

18 Jan 2024 , 02:16 PM

Result date: January 24, 2023

Recommendation: Sell

Target price: Rs. 980

Analysts at IIFL Capital Services expect Tech Mahindra’s revenue to decline 1% cc sequentially, due to continued demand slowdown across Communications and Enterprise verticals combined with impact of furloughs. Deal wins in the December quarter will probably continue to be weak, which could hurt near-term growth. 

The company’s EBIT margins could expand by 60 basis points sequentially, due to lower one off costs related to organizational restructuring during the quarter.

Tech Mahindra’s Profit After Tax or PAT could decline 15.3% on a sequential basis.

Important management insights to watch out for:

• Progress of the organizational restructuring exercise
• Revenue and margin outlook for CY24
• Quantum and nature of deal wins
• Outlook for 5G spends
• Structural margin levers for CY24
• Capital allocation

	December 2023 estimates	QoQ change	YoY change
Revenue (US$ mn)	1,530	(1.6)%	(8.3)%
Revenue (Rs. mn)	127,000	(1.3)%	(7.5)%
EBIT (Rs. mn)	6,773	11.7%	(58.8)%
EBIT margin	5.3%	60 bps	(670) bps
Profit After Tax (Rs. mn)	5,451	(15.3)%	(58.0)%
EPS (Rs.)	6.1	(15.3)%	(58.0)%

Source: IIFL Research