Shares of Tech Mahindra dropped as much as 6.67% in intraday trade on Friday after the country's fifth-largest software services company surprised the market with a 1.2% year-on-year revenue decline.
The shares opened today at ₹1,530 and reached an intraday high of ₹1,541.95. After a sharp dip, the shares have recovered and are currently trading positively, up 0.31% at ₹1,534.70.
The financial results released by Tech Mahindra Thursday evening reveal that the company’s consolidated net profit stood at ₹851 crore growing by 28.8% from ₹661 crore in the previous quarter and by 23% on a year-over-year basis.
The growth in profits was due to a sharp decline in company expenses that fell from ₹10,169.6 crore in Q1 2023-24 to ₹9,930.70 crore in the quarter that ended on June 30, 2024, despite a 4.6% hike in employee benefit expenses.
Last year in the first quarter the company had reported a revenue of ₹10,898.2 crore that dropped to ₹10,753 crore in this quarter however, this was better when compared to the company’s total income in the fourth quarter of the last fiscal which stood at ₹10,687.7 crore.
"It is encouraging to see positive momentum in most industry verticals which has led to revenue growth and margin expansion in an otherwise seasonally weak quarter. We continue to focus on execution and are on track to achieve our stated goals for FY27," said Mohit Joshi, CEO and MD of Tech Mahindra.
With a healthy uptick of 16.9% against the same quarter in the last fiscal, the company’s EBITDA stood at ₹1,564 crore. While on a quarterly basis the company’s headcount grew by 1.4%, the employee count did not reach the levels they were at in the same quarter last year.
While credit agencies such as Jefferies have maintained an underperform rating on Tech Mahindra, Rohit Anand, the company’s CFO considers the company’s performance in line with its medium-term strategy. “Our focus continues to be on investing in the business for long-term sustainable performance," he added.
