Q1FY23 Preview: Tech Mahindra: Revenue seen at Rs124,219 million; PAT at Rs11,434 million

23 Jul 2022 , 11:59 PM

Result date: 25th July
Recommendation: Buy
Target Price: Rs1,250

Analysts at IIFL Capital Services forecast Tech Mahindra’s constant currency revenue to grow 2.7% on a sequential basis as strength across verticals is partially offset by Comviva seasonality. Deal wins in the June 2022 quarter should remain elevated.

EBIT margins are expected to contract by 170 bps sequentially due to the impact of wage hikes, visa costs, increasing travel expenses and Comviva seasonality. 

Weak operating profit could trickle down to the Profit After Tax (PAT) as well.

Key management insights to look into:

• Trajectory of deal wins, including colour on 5G deal sizes and quantum
• Revenue and margin outlook for FY23
• Comments on capital expenditure and integration of acquisitions
• Comments on attrition, sub-contracting costs and employee additions
• Impact of on‐going macro concerns

	June 2022 estimates	YoY change	QoQ change
Revenue ($mn)	1,609	16.3%	0.1%
Revenue (Rs mn)	124,219	21.8%	2.5%
EBIT (Rs mn)	14,283	(7.6)%	(11.0)%
EBIT margin	11.5%	(370) bps	(170) bps
Profit After Tax (Rs mn)	11,434	(15.5)%	(24.1)%

Source: IIFL Research