Tech Mahindra Q2 Results Review - Miss Expectations; Outlook Remains Weak: Axis Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Axis Securities Report.Financial Performance In Q2 FY24, Tech Mahindra Ltd. reported revenue of Rs 12,869 crore, down 2.2% on a QoQ basis. While it posted a de-growth of 5.9% on a YoY basis (in constant currency terms), it stood below our expectations. The company posted an operating profit of Rs 606 crore, reporting a de-growth of 31.9% on a QoQ basis. Tech Mahindra’s operating margins, too, stood below our expectations, declining by 210 bps. This was largely led by higher selling, general and administrative expenses, an unfavorable currency mix, and one-time acquisition costs during the quarter. The company’s net profit for Q2 FY24 stood at Rs 505 crore, registering a de-growth of 28.7% QoQ. .Outlook From a long-term perspective, we believe Tech Mahindra is sorting out the client specific engagement issues on the verticals front and the deal pipeline remains sturdy. However, rising concerns over the prospects of large economies along with prevailing supply-side constraints pose uncertainties over the company’s short-term growth rates..Valuation and recommendation We assign a 16 times price/earnings multiple to its FY25E earnings of Rs 62.1/share to arrive at a target price of Rs 995/share, implying a downside of 13% from the current market price. Hence, we recommend a 'Sell' on the stock..Click on the attachment to read the full report:.Tech Mahindra Q2 Review - Muted Performance Led By Subdued Performance Across Verticals: Yes Securities .DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Tech Mahindra Q2 Results Review - Miss Expectations; Outlook Remains Weak: Axis Securities

The demand scenario remains uncertain and may lead to lower revenue growth momentum in the near term.

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