Q2 Results Update: How Tech Mahindra's Share Price Is Performing Ahead Of Earnings?

IT player, Tech Mahindra witnessed cautious betting on Wednesday as investors showed wait-and-watch sentiments ahead of the company's Q2FY24 earnings which are scheduled for later in the day. Broadly, Tech Mahindra's share price has been in the green, however, the upside is fractional. The company's peers TCS, Infosys, HCL Tech, Wipro, and LTIMindtree have witnessed a dull top-line in Q2FY24, and many of them trimmed their FY24 guidance due to near-term challenges.

Hence, traders most likely want to observe the Q2 report card of Tech Mahindra first before placing their bets.

At the time of writing, Tech Mahindra's share price traded at Rs 1,156.65 apiece, marginally up on BSE compared to the previous session's closing of Rs 1,155.15. Its market cap currently stands at nearly Rs 1.13 lakh crore.

Moreover, the share price ranged from an intraday high of Rs 1,165.40 to an intraday low of Rs 1,153 per share on BSE.

Tech Mahindra will declare its consolidated and standalone financial results on October 25 as well for the quarter ending September 30, 2023.

Apart from this, the company will consider a proposal for payment of interim dividends for the financial year 2023-24 in the meeting scheduled today. For the same, Tech Mahindra said it has fixed November 2, 2023, as the record date for determining the members entitled to receive the Interim dividend, if approved by the Board.

During the June 2023 quarter, Tech Mahindra posted a consolidated net profit of Rs 693 crore, which declined by 38% QoQ and 28.8% YoY. Revenue was at Rs 13,159 crore; down 4.1% QoQ, up 3.5% YoY. EBITDA at Rs 1,338 crore; down 33.8% QoQ, down 28.8% YoY. Total headcount stood at 148,297 down 4,103 QoQ.

Tech Mahindra offers innovative and customer-centric digital experiences, enabling enterprises, associates, and society to Rise for a more equal world, future readiness, and value creation. It is a USD 6.5+ billion organization with 148,000+ professionals across 90 countries helping 1250+ global customers, including Fortune 500 companies.

What to expect from Tech Mahindra in Q2FY24?

In its preview note, Kotak Institutional Equities said, "We expect revenues to remain flat on qoq basis in c/c terms with weak performance across communications and enterprise segment. 1QFY24 EBIT margin was impacted by 200 bps due to unanticipated bankruptcy of a client."

Further, the brokerage forecasts a stable adjusted EBIT margin of 8.8%. It added, "The company may have one-time costs in the quarter, which is difficult to quantify. Hence, we do not bake the same in our estimates."

Also, the brokerage said, "Deal wins will remain muted due to weak macro and slow decision-making. We forecast a net new TCV of US$400-500 mn. We expect quarterly financials to have limited sway in the near term with a focus on turnaround under Mohit Joshi. The recently announced organization structure can lead to a few exits at the leadership levels."

Accordingly, Kotak has estimated a net sales of Rs 13,207.7 crore in Q2FY24, marginally up by 0.6% YoY and 0.4% QoQ. Reported PAT is expected to decline by 24.2% YoY but rise by 40.7% QoQ to Rs 974.7 crore.

Also, Dhruv Mudaraddi, Research Analyst, StoxBox said, "We anticipate Tech Mahindra to report a marginal decline in its Q2FY24 revenue sequentially, attributed to a prolonged slowdown in demand across the Communication and Enterprise sectors and project ramp-downs at the start of the quarter. Along with the weak topline, a contraction in margins is also foreseen due to the organization's restructuring exercise undertaken during the quarter. The deal wins have also been weaker during the quarter which might adversely impact short-term growth."

Additionally, Mudaraddi said, "our focus would be on deal TCVs and pipeline within the communication vertical, pricing dynamics, attrition rates, and the outlook on growth, margins, and DSO days will be crucial, along with any commentary provided on the anticipated impact of the ongoing 5G rollout."

Disclaimer:

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