Tech Mahindra falls 5% on weak Q2 earnings: Should you still buy?
Tech Mahindra reported a weak set of results yet again. Shares of the IT major fell almost 5 percent on Thursday after it reported a sharp fall in its net profit in the September quarter (Q2FY24). It also failed to meet street expectations on both profit and revenue.
Further cuts in target prices and earnings estimates by various brokerages also kept the sentiment negative. The stock lost as much as 4.6 percent to its intra-day low of ₹1,089. The firm reported a 61.1 percent year-on-year (YoY) fall in Q2FY24 consolidated net profit at ₹505.3 crore versus ₹1,299.2 crore.
Sequentially, the net profit was down 28.18 percent. In Q1FY24, the net profit of the company was ₹703.60 crore. Meanwhile, Its Q2FY24 consolidated revenue from operations declined 2 percent YoY to ₹12,863.9 crore in Q2FY24 against ₹13,129.5 crore in the year-ago period.
Its revenue was mainly dragged by the Communications, Media and Entertainment (CME) and BFSI segments. On a quarter-on-quarter (QoQ) basis, the revenue for operations was down 2.20 percent. In the US dollar terms, the company's revenue came at 1,555 million, down 5.1 percent YoY and 2.8 percent QoQ (quarter-on-quarter).
The company’s EBIT margin or operating margin came in at 4.7 percent, which is worse than the previous quarter’s 6.8 percent. Segmentwise, barring Manufacturing (up 5.7 percent YoY) and Technology (up 2.8 percent YoY), revenue of all key segments dropped on a YoY basis. Revenue of the Communications, Media and Entertainment (CME) vertical dropped 11.5 percent YoY while the Banking, Financial Services and Insurance (BFSI) segment's revenue fell 6.3 percent YoY.
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