Tech Mahindra share price drops over 5% after Q1 results; top brokerages retain their cautious views; here's why

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₹1,100.05 against the previous close of ₹1144.05 and fell 5.4 per cent to hit an intraday low of ₹1,082.55. Shares of Tech Mahindra have underperformed the benchmark Sensex in the last one year. Tech Mahindra shares are up 16 per cent in the last one year against a 21 per cent gain in the equity benchmark Sensex.

However, the BSE IT index gained just about 8 per cent in the same period. Tech Mahindra Q1 results: Tech Mahindra's revenue for Q1FY24 fell 4.1 per cent quarter-on-quarter (QoQ) but rose 3.5 per cent year-on-year (YoY) to ₹13,159 crore. Consolidated PAT (profit after tax) for the quarter under review came at ₹693 crore, down 38 per cent QoQ and 38.8 per cent YoY.

EBITDA for Q1FY24 came at ₹1,338 crore, down 33.8 per cent QoQ and 28.8 per cent YoY. Earnings per share (EPS) was at ₹7.82. The company's deal wins were soft in Q1FY24 while headcount fell 6.2 per cent YoY and 2.7 per cent QoQ.

Read more: Tech Mahindra Q1 Results: Profit, EBITDA to deal wins - five key takeaways from IT major's earnings Many brokerage firms have pessimistic views on Tech Mahindra as they believe macroeconomic headwinds will continue to keep the sector under pressure and continued pressure in the CME (communications, media and entertainment) vertical will weigh on Tech Mahindra's growth. Brokerage firm Motilal Oswal Financial Services has a neutral view on Tech Mahindra stock with a target price of ₹1,080 as it said Tech Mahindra delivered a weak Q1FY24 performance, missing its estimates. "The weakness was primarily due to a slowdown in CME, while the Enterprise segment saw a marginal dip versus Q4FY23.