T services major Tech Mahindra reported a 61.6 percent fall in net profit to Rs 494 crore year-on-year for the quarter ended September 30, signalling a muted second quarter driven by slowing demand in telecom and communications segment and delays in deal cycles.
Communications, media and entertainment (CME) currently account for nearly 40 percent of the company’s revenue.
YoY net profit was significantly below of a decline of 37 percent YoY touching Rs 822 crore. It also missed QoQ growth estimate of 18 percent.
Consolidated revenue for Q2FY24 declined 2 percent YoY at Rs 12,864 crore, missing Moneycontrol’s estimate of a marginal decline of 0.01 percent YoY coming at Rs 13,127 crore. On a QoQ basis revenue was down by 2.2 percent.
The company’s EBIT margin or operating margin came in at 4.7 percent, which is worse than the previous quarter’s 6.8 percent. This was a missing Finrollnews estimate of 8.9
Tech Mahindra’s board announced an interim dividend of Rs 12 per share for FY23-24.
Tech Mahindra now wants to diversify its revenue dependency from CME to other segments such as BFSI and healthcare. According to reports, CEO designate Mohit Joshi is currently reshuffling duties of the senior management to achieve the same, as competition from peers intensifies in a weaker demand environment.
This was CEO and MD CP Gurnani’s last quarter as he is set to retire on December 19. Joshi is set to take over after December 19, following the retirement of Gurnani.
This comes at a time when Tier-I IT companies are already slashing revenue guidance for FY24 amidst macro headwinds, despite expecting a strong order book for the next two quarters.
Tech Mahindra closed at Rs 1,141.70 on BSE, down 13.45 percent from the previous day.