Tech Mahindra Q4 Results Preview: Weakness to persist as profit, revenue seen falling

Meanwhile, revenues, both in rupee and constant currency terms, are likely to fall. Analysts peg constant currency revenue growth at -1.4%, while the rupee revenue is likely to fall anywhere between 3-5% YoY.

The overall revenue numbers would be a let down due to weakness across communications and enterprise segments.

Even though deal wins are likely to be stable in the fourth quarter, they will still be below normal levels.

Here's what to expect from Tech Mahindra's Q4

Axis Securities

We expect the company to report revenue growth of 0.7% on a QoQ basis. Its margins are likely to expand due to strong growth in volume and reshuffling of the portfolio. Watch out for deal TCVs and pipeline in the communication vertical, pricing scenario, attrition, outlook on growth/margins/DSO days, and commentary on the 5G rollout.

Nuvama

TechM to report -1.4% quarter-on-quarter decline in CC and -1.0% decline in USD - driven by weakness in the Telecom segment and absence of pass-through revenues. Margins to expand by 200 bps quarter-on-quarter to 7.3%, on the back of the absence of one-off cost. Adjusted margins to remain flat quarter-on-quarter. Deal wins are expected to be stable.

Motilal Oswal

Revenue growth is expected to be muted at 0.7% QoQ CC due to weakness in both CME and Enterprise verticals. Deal wins are likely to be muted due to macro uncertainty.

We expect a deal TCV to the tune of $500 million in the fourth quarter. Margins are likely to improve 140 bps quarter-on-quarter, as the impact of cost-control efforts should start becoming visible. Weak growth is likely to keep margins under pressure.

The outlook on margin and growth in the CME vertical will be the key monitorables.

Kotak Institutional Equities

We expect a 1.4% quarter-on-quarter decline in revenue due to weakness across communications and enterprise segments. 4QFY24 EBIT margin segment could improve by 200 bps due to the absence of provisions related to unprofitable contracts. Normalized EBIT margin improvement would be gradual in FY2025E.

Deal wins will improve sequentially although they will still be below normalised levels. Weakness is due to weak macro and slow decision-making. We forecast net new TCV of $500-600 million.

We expect quarterly financials to have limited sway on stock performance in the near term with focus on details of a turnaround strategy under the current CEO.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)