Q2FY23 Preview: Tech Mahindra: Revenue seen at Rs130,985 million, PAT at Rs11,598 million

31 Oct 2022 , 06:15 AM

Result date: 1^st November, 2022
Recommendation: Buy
Target price: Rs1,130

Analysts at IIFL Capital Services forecast constant currency (cc) revenue growth of 2.8% sequentially (+2.6% cc organic sequential growth) as strength in Telecom vertical is offset by some softness in Enterprise vertical. Deal wins in Q2 should remain healthy, albeit decline on a sequential basis.

They expect margins to expand by 40 basis points sequentially as the impact of wage hikes is offset by lack of one-offs, like visa costs and productivity.

The company’s Profit After Tax (PAT) could grow 2.5% on a sequential basis.

Important management insights to watch out for:

• Deal wins, including colour on 5G deal
• Revenue and margin outlook for H2FY23
• Comments on capital allocation and integration of acquisitions
• Supply-side comments related to attrition trends, sub-contracting costs and employee additions

	September 2022 estimates	QoQ change	YoY change
Revenue (US$ mn)	1,641	0.5%	11.5%
Revenue (Rs. mn)	130,985	3.1%	20.4%
EBIT (Rs. mn)	15,012	7.0%	(9.1)%
EBIT margin	11.5%	40 bps	(370) bps
Profit After Tax (Rs. mn)	11,598	2.5%	(13.4)%
EPS (Rs.)	13.1	2.5%	(13.5)%

Source: IIFL Research