Tech Mahindra shares fall 4% post Q3 results: here’s why

Shares of Tech Mahindra dropped over 4% in intraday trade on Tuesday, in a muted broader market, as investors weighed the management's weak commentary post December quarter earnings.  The IT stock has fallen 6% in a week and currently trades 6% higher than its 52-week low of ₹944.10 touched on June 17, 2022.

Reacting to Q3 earnings Tech Mahindra shares price opened 1.1% lower at ₹1,024.25 against the previous closing price of ₹1,036.15 on the BSE. During the session so far, the IT stock declined as much as 3.8% to hit an intraday low of ₹996.40, driven by a surge in selling activities. On the volume front, 1.26 lakh shares changed hands over the counter as compared to the two-week average volume of 0.58 lakh stocks. The market capitalisation stood at ₹97,989 crore at the time of reporting. In comparison, the BSE Sensex was trading 145 points lower at 59,355 levels.

Tech Mahindra shares touched a 52-week high of 1,574.80 on March 25, 2023. The stock has fallen 32% in a year, while it has dropped 4% in a six-month period. The IT major has given flat returns in a month, while it shed 6% in the last five sessions.

In a post market hour on Monday, Tech Mahindra reported a 5% drop in the consolidated profit after tax at ₹1,297 crore in Q3 FY22, as against ₹1,378 crore in the year-ago period. The total income rose 20% to ₹13,735 crore compared to ₹11,451 crore in the same period last year. On the operational front, EBITDA stood at ₹2,144 crore, up 4.1% YoY. At the end of December quarter, total headcount stood at 157,068, down 4.2% on quarterly basis.

CP Gurnani, Managing Director & Chief Executive Officer, Tech Mahindra, said, “We are witnessing moderation in growth given the tough macro economic environment. We will continue to work with our customers to pre-empt their technological requirements and identify, new demand drivers, especially for digital services.”

Rohit Anand, Chief Financial Officer, said, “Our numbers reflect resilience as we continue to work on the expansion of operating margin. I am confident that our strategy of client centricity & agility combined with delivery led transformation will help us create value for our customers and stakeholders alike.”

In dollar terms, profit after tax (PAT) dropped 14.4% YoY to 157 million, while revenue grew 8.8% YoY to $1,668 million. EBITDA stood at $260 million, down 5.9% YoY, while EBITDA margin was at 15.6%, up 50 basis points. As of December 31, 2022, cash and cash equivalent stood at $780 million.