Tech Mahindra’s shares saw a sharp decline of 6.09% after the company reported a significant drop in its net profit for the third quarter (Q3 FY24). The stock reached a day low of Rs 1,322, down from the previous close of Rs 1,407.75. Despite reaching its one-year high of Rs 1,416 a few days earlier, the stock has shown a 28% increase over the past year.
The net profit for the three months ending December 31, 2023, fell to Rs 510 crore, a 60.6% decrease from Rs 1,297 crore in the same period the previous year. This quarter marks the first under the leadership of CEO Mohit Joshi, who took over from former CEO CP Gurnani.
Tech Mahindra reported a revenue of Rs 13,101 crore during the quarter, with operating margins slipping 660 basis points to 5.4% compared to the previous year’s period. New deal wins also dropped to $381 million from $795 million.
The company faced challenges in its largest revenue-generating vertical, communications, media, and entertainment, which saw a 13.4% decline. CEO Joshi acknowledged a mixed outcome for the quarter, with growth in manufacturing and healthcare segments but subdued spending in communications, BFSI, and hi-tech.
The broader Indian IT industry, valued at $245 billion, has been impacted by uncertain demand as clients cut back spending amid inflation and recession fears.
Regarding technical indicators, the stock traded below the 5-day and 10-day simple moving averages (SMAs) but above the 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day SMAs. The 14-day relative strength index (RSI) stood at 54.54, indicating a neutral position.
Tech Mahindra’s stock had a price-to-equity (P/E) ratio of 45.86 and a price-to-book (P/B) value of 5.90. As of December 2023, promoters held a 35.11% stake in the IT firm. For more information, stay tuned to the IncBasil Website.
