Tech Mahindra Q1 Results preview: Expect a weak set of numbers; here are the key factors to watch out

livemint.com:

Tech Mahindra is likely to report a subdued set of June quarter results on Wednesday (July 26) mostly because of weakness in its CME (communications, media and entertainment) vertical. The IT firm's revenue may see soft growth but profit after tax (PAT) may dip on a year-on-year (YoY) basis. Some brokerage firms expect Tech Mahindra's constant currency (CC) revenue to decline in quarter-on-quarter (QoQ) terms.

While the numbers will show how the company performed in the last quarter, investors would focus on the near-term growth outlook, deal pipelines and outlook on its business segments. Brokerage firm Phillip Capital expects Tech Mahindra's revenue to rise 6.3 per cent YoY, but PAT may see a 2.6 per cent YoY fall. "Tech Mahindra's CC revenue to decline by 1.8 per cent QoQ led mainly by its CME vertical due to Comviva seasonality and overall weakness in CME.

Enterprise also is expected to decline marginally due to weakness in BFSI and Hitech," said Phillip Capital. "EBIT may fall 1.5 per cent YoY, EBIT margin mat decline 80 bps YoY due to lack of growth, Comviva seasonality and partial wage hikes," said Phillip Capital. Apart from the numbers, Phillip Capital believes CEO transition, new strategic initiatives comments, deal TCV (total contract value) and pipeline, margins levers, outlook on growth and margins for FY24 and commentary on 5G will be key things to focus on.

As per the estimates of brokerage firm Motilal Oswal Financial Services, Tech Mahindra's revenue may climb 5.8 per cent YoY in rupee terms while adjusted PAT may decline 14.8 per cent QoQ and may remain flat on YoY terms. "CME is expected to see a sharp dip in Q1FY24. Enterprise will also remain muted on weak BFSI.