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Dolat Capital Report
Tech Mahindra Ltd. reported constant currency growth of 2.9% QoQ (our estimate: 2.6%), which was led by 3.1% QoQ growth for communications, media and entertainment, while enterprise grew 2.8% QoQ.
However, revenues in reported terms (Indian rupee) were below estimate due to weaker Indian rupee realizations. Announced dividend per share of Rs 18.
Operating profit margin stood at 11.4%, (our estimate: 11.4%), up 32 basis points QoQ, net improvement from better utilisation, exit of lower margin biz., selling, general and administrative savings and better pricing, negated by wage hike, inflation and forex headwind.
Commentary turns cautious for European market wherein it has already started experiencing delayed decision making.
Accounting for Q2 results, we note Tech Mahindra's change in stance from positive to cautious, and expect growth rates to be challenged in light of volatile macro environment.
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