Tech Mahindra Q2: Profit down 61%, lowest QoQ growth among peers
Tech Mahindra’s net profit for the fiscal second quarter plunged 61.5% on year, missing estimates, due to what it said were unanticipated pressure on capital expenditure and a lack of recovery in the communications domain, the software company’s largest revenue driver.
Quarterly net profit stood at Rs 494 crore, with the sharp fall coming at a time when all leading industry peers have given a bleak FY24 guidance due to a delay in decision-making and cuts in discretionary spend.
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Offering CollegeCourseWebsiteIIM LucknowIIML Executive Programme in FinTech, Banking & Applied Risk ManagementVisitIndian School of BusinessISB Product ManagementVisitIndian School of BusinessISB Professional Certificate in Product ManagementVisitTech Mahindra’s revenue for the quarter dipped 2% year on year to Rs 12,684 crore, missing estimates. On a sequential basis, profit was down 28% while revenue was down 2.2%. According to an ET poll of analysts, revenue growth was expected to be around Rs 13,133 crore while profit was expected to stand at Rs 700 crore.
Outgoing CEO CP Gurnani said that the last two quarters were the most difficult quarters of his career. “The main reason why I call it difficult is not because of relatively slower growth or less profitability. It is just that we believe that in terms of market timing, in terms of service offering, I thought we were poised for winning some of the technology investments, particularly by 5G, and I don't think the wave was strong enough for 5G.”
He added that some of the company’s customers have had to stop capital expenditure, leading to pressure on revenue. This was Gurnani’s last quarter as the CEO of the company.
On a constant
