Tech Mahindra Q3 results today: What to expect, how to trade the stock and key things to watch
TCS, Infosys and HCL Tech, investors are eagerly awaiting the quarterly numbers from Tech Mahindra, which will report its earnings today. However, the expectations from the company seem to be modest for the third quarter.
Want to take exposure to a sector which grows much faster than GDP
Tech Mahindra may report sequential decline in overall revenue and constant currency revenues, dragged down by the communication and enterprise verticals.
Net profit for the October-December period is likely to rise around 44% quarter-on-quarter.
Here are the key things to track for investors
Margins
Tech Mahindra may see margin expansion up to 330 basis points on a sequential basis, due to reversal of one-offs and operational efficiencies. However, it will be offset to some extent by a decline in revenue.
Deal wins
Deal wins for the third quarter are likely to be muted due to lower working days, weak macro environment and slow decision making. Analysts are expecting the TCV (total contract value) to be in the range of $300-500 mn.
Brokerages take
«We expect TechM's 3Q revenues to decline by 1.6% QoQ in cc, due to furloughs and continued portfolio optimisation in the Communication vertical,» said Jefferies.
«We expect the company to report revenue growth of 0.5% on a QoQ basis while its margins are likely to expand due to strong growth in
volume and reshuffling of the portfolio,» said Axis Securities.
Segments growth
The communication and enterprise segments are likely to remain under pressure due to lack of discretionary spending and higher furloughs.
Key things to track
Investors will keep a track on deal pipeline, especially in the communication vertical, attrition levels and outlook on growth.
How to trade the stock
Shares of Tech
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