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NEW DELHI: Shares of Tech Mahindra were trading marginally higher in Tuesday’s trade ahead of the IT firm’s second quarter results scheduled later for the day.
The Anand Mahindra-led company is likely to post a 10-14 per cent year-on-year (YoY) drop in profit on a 1-1.5 per cent rise in sales in constant currency (CC) terms.
The numbers could be weighed by a recent deal win in communication vertical due to initial transaction expenses.
Commentary on 5G, outlook for BFSI and healthcare in enterprise and deal wins will be keenly eyed.
Brokerage Sharekhan expects the company to log a 3.4 per cent YoY (1 per cent QoQ) rise in dollar revenues.
“We expect 1.8 per cent QoQ revenue growth on CC basis and cross-currency headwinds of 80 basis points.
Revenue growth will be driven by the telecom vertical, while revenue growth in the enterprise vertical would remain muted owing to softness in the manufacturing vertical,” it said, while anticipating a 14.2 per cent YoY (4.8 per cent QoQ) fall in profit.
Ebitda margin is expected to improve by 59 bps QoQ on account of absence of wage hike, visa costs, improvement in margin profile of portfolio companies and rupee appreciation.
But the benefits are expected to be offset by transition costs of large deal with AT-T.
On YoY basis, margins are expected to fall 300 bps.
“We expect revenue growth of 1.5 per cent QoQ CC.
Most of the incremental revenue is expected to come from growth in communication segment.
Enterprise is expected to be muted in the near term (led by client-specific issues and macros distress in manufacturing segment).
We expect net income of Rs 960 crore, a decline of 1.1 per cent QoQ, mainly due to lower other income,” said Motilal Oswal Securities.
This brokerage sees EBIT margin at 12.2 per cent, up 70 bps QoQ off a low base.
At 9.45 am, the scrip was up 0.22 per cent at Rs 771.05 on BSE.
