Tech Mahindra shares tank 4% post Q3 earnings

Shares of Tech Mahindra declined 4.19 per cent in early trade to hit an intraday low of Rs 1443.95 on BSE after the company posted its earnings for the quarter ended December 2021.
 
The company reported a 4.5 per cent year-on-year (YoY) rise in its consolidated net profit for the October-December quarter at Rs 1,369 crore. On a quarter-on-quarter (QoQ) basis, profit was higher by 2.2 per cent.
 
Revenue from operations rose 18.7 per cent YoY and 5.2 per cent QoQ to Rs 11,451 crore, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8.7 per cent YoY and 2.2 per cent QoQ to Rs 2,060 crore.

Read: https://www.businesstoday.in/latest/corporate/story/tech-mahindra-q3-results-net-profit-up-45-to-rs-1369-crore-321128-2022-02-01
 
At 11:00 hours, the shares were trading 3.39 per cent lower at Rs 1,465 against the previous close of Rs 1,507.05. Market cap of the firm fell to Rs 1,41,324.57 crore. The shares stand higher than 200 day moving averages but lower than 5 day, 20 day, 50 day and 100 day moving averages.
 
CP Gurnani, Managing Director & Chief Executive Officer, Tech Mahindra, said, "Our people-first approach combined with sustained value creation this quarter reflects our commitment towards redefining possibilities and competencies in the new normal. We continue to strengthen our presence, deliver broad-based profitable growth and value for our customers, backed by future-ready talent and niche digital capabilities."
 
Brokerage house Prabhudas Lilladher noted that demand momentum is strong in 5G and network services. Growth momentum in communication is expected to remain healthy as telcos are adopting an agile way of contracting by initially creating smaller milestones that add up to larger engagements.
 
"In FY23, margin levers of pyramid optimization, increase in utilisation, gradual reduction of sub-con costs will aid margins. Net headcount addition of Software professionals is healthy 5.6 per cent QoQ, 18 per cent YoY but lower compared to 6.9K net addition in Q2," it added.
 
"Our EPS estimates decrease by 3.2 per cent/1.2 per cent for FY22/23 led by a cut in margin estimates and remain unchanged for FY24. We arrive at DCF based target price of Rs 1,942 from earlier Rs 1,945 (implying a target multiple of 23x on FY24 EPS). TechM is currently trading at an earnings multiple of 20x/18x on FY23/24 EPS of INR 76.5/84.4 respectively. TechM has Revenue/EPS CAGR of 13.8 per cent/15.3 per cent over FY22-24," the brokerage house said.