IT player Tech Mahindra will release its December quarter numbers on January 31 in the wake of mixed earnings reported by major industry players such as TCS and Infosys.
December quarter is a seasonally weak quarter for IT players and brokerages are expecting a weak show from Tech Mahindra also.
Other than the quarterly numbers, the market will keenly observe Tech Mahindra's outlook for the communications segment, said brokerages.
Brokerage firm Motilal Oswal Financial Services expects a tepid growth in both communication and enterprise with a partial AT&T deal impact on growth.
The estimates of the brokerage show a 4.9 percent year-on-year (YoY) rise in the company's revenue to Rs 9,378.7 crore, but EBITDA may see a 13 percent YoY fall to Rs 1,502.6 crore against Rs 1,722.6 crore.
The EBITDA margin is also likely to slip to 16 percent in Q3FY20 against 19.3 percent, reported in Q3FY19. PAT, excluding BT amortisation and expression of interest (EOI) may see a 16.2 YoY fall to Rs 1,008 crore for Q3FY20, said Motilal Oswal.
On similar lines, Antique Stock Broking expects a 17 percent YoY decline in Tech Mahindra's net profit to the tune of Rs 1,010.9 crore, while EBITDA, too, is expected to see a 13 percent YoY fall to Rs 1,500.1 crore.
However, revenue can see a 5 percent YoY gain to Rs 9,414.5 crore and the brokerage sees a 2.2 percent growth in CC terms led by growth in both telecom verticals.
Kotak Securities has forecasted CC revenue growth rate of 2 percent on sequentially and 5 percent on YoY basis for Tech Mahindra.
Besides, the brokerage expects a 30 bps inorganic contribution to revenue growth from the acquisition of BORN Group.
"Revenue growth will be led entirely by communications vertical. All verticals in the enterprise segment will grow but will be offset by a decline in revenues from HCL," said Kotak.
"Revenues from AT&T contract are likely to be spread across December 2019 and March 2020 quarter as compared to our earlier expectation of entire revenue flowing through in the December 2019 quarter," it added.
The estimates of Kotak Securities show EBIT margin may decline 325 bps YoY despite the benefit of rupee depreciation on account of large rebadging and transition costs of AT&T deal, and one-off gain of 60 bps from the recovery of bad debt. Adjusted PAT may see a YoY fall of 22.7 percent to Rs 929.3 crore.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.