Tech Mahindra’s stock demonstrated notable resilience during Thursday morning trading on April 24, even as the broader market faced challenges. Opening at ₹1,450.45, a rise from the previous close of ₹1,439.30, it reached an intraday peak of ₹1,466.05, representing a 1.9% increase. By around 10 AM, the shares were trading at ₹1,452.10, up 0.90%, while the Sensex index was down 0.22% at 79,938.
Recovery Amidst Market Weakness
After experiencing four consecutive months of decline, Tech Mahindra’s shares have shown a revival in April, climbing nearly 2% this month. However, over the year, the stock has dropped by almost 16%. Notably, it hit a 52-week low of ₹1,172.55 on April 25 and peaked at ₹1,807.40 on December 12 of the previous year.
Anticipation Surrounding Q4 Earnings
Tech Mahindra is set to release its financial results for the March quarter (Q4 FY25) later today, April 24. Investors are keenly watching not just the earnings but also the possibility of an interim dividend announcement for the fiscal year.
- Earnings Expectations:
- Mixed growth anticipated in profit and margins.
- Key segments to watch include CME (Communications, Media, and Entertainment) and manufacturing.
Analysts from Motilal Oswal Financial Services predict a 0.8% quarter-on-quarter decline in revenue in constant currency, primarily due to sluggish recoveries in telecom and manufacturing, which together account for nearly half of Tech Mahindra’s revenue. They noted, “While the communications vertical has stabilized, a full recovery may take time.”
Insights on Profit and Margins
Motilal Oswal estimates a 3.3% year-on-year increase in adjusted profit after tax (PAT) and a 1.8% quarter-on-quarter rise, with margins expected to improve by 10 basis points despite wage increases. This performance aligns with the goals of Project Fortius, Tech Mahindra’s three-year initiative aimed at achieving a 15% operating margin.
Nuvama Institutional Equities has a somewhat cautious outlook, forecasting a 0.7% revenue decline quarter-on-quarter in constant currency and a 1.5% drop in US dollar terms. They point out that while reversals of furloughs and seasonality from Comviva may provide some benefits, challenges in the hi-tech sector and low-margin contract closures could offset these gains.
Looking Ahead
Both brokerage firms emphasize the importance of management’s future guidance on revenue and margins for FY27. As investors await the Q4 results and insights from Tech Mahindra’s leadership, the market will be closely monitoring developments in the crucial sectors that drive the company’s business.
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