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Last Updated : May 21, 2019 11:45 AM IST | Source: Moneycontrol.com

Tech Mahindra to post Q4 earnings today; here's what brokerages expect

The IT major is expected to come out with its March quarter earnings on May 21.

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Tech Mahindra is expected to report a fall in its Q4 profits, according to the brokerages and research firms tracking the company.

The IT major is expected to come out with its March quarter earnings on May 21.

Prabhudas Lilladher expects Tech Mahindra to report a net profit of Rs. 1.078.5 crore down 10.3 percent quarter-on-quarter (down 11.7 percent year-on-year). Net Sales are expected to increase 11 percent Y-o-Y to Rs 8,939.2 crore.

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Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 1.5 percent Q-o-Q (up 20.2 percent Y-o-Y) to Rs. 1,697 crore.

Kotak Institutional Equities expects Tech Mahindra to report a net profit of Rs. 1,134.3 crore down 5.7 percent quarter-on-quarter (up 20.3 percent year-on year). Net Sales are expected to increase by 0.6 percent Q-o-Q (up 15.7 percent Y-o-Y) to Rs. 8,997.2 crore while EBITDA are likely to fall by 0.1 percent Q-o-Q (up 36 percent Y-o-Y) to Rs. 1,720.5 crore.

Centrum Broking Research expects Tech Mahindra to deliver a modest CC revenue growth of 1 percent QoQ in Q4FY19. The telecom vertical is likely to remain on the growth path, led by a ramp-up of the recent deal wins. However, it feels that the vertical is likely to remain flat QoQ in Q4FY19.

Cross currency would be a tailwind of 20bps for the quarter. Hence, the reported USD revenue growth could be 1.2 percent QoQ. Centrum expects Tech Mahindra’s Q4FY19 EBITDA margin at 19 percent, down 30bps QoQ, led by rupee appreciation.

It expects Tech Mahindra to deliver a 4.4 percent and 7.9 percent USD revenue growth for FY19E and FY20E respectively. The organic revenue growth for FY19E would be 3.7 percent and the rest owing to acquisitions. The company is likely to show a turnaround in the overall revenue growth trajectory in FY20E, led by a revival in Telecom vertical.

Profit after Tax is likely to fall 4.8 percent QoQ (down 6.2 percent YoY) at Rs 8,999.5 crore, the Centrum report said.

According to Narnolia Financial Advisors, Tech Mahindra may report Rs 1,190 crore of profit, down 3 percent QoQ. The IT firm is expected to post strong growth of 3.3 percent QoQ in USD term led by turnaround in telecom, robust deal wins ramping up (USD 440 million wins in 3QFY19) and continued growth in enterprise segment.

The communication segment is expected to post a strong growth again in 4QFY19 led by ramping up of large wins (USD 240 won in 3QFY19) and a continuous growth in deal win in digital transformation work.

Margins are expected to be muted in 4QFY19 (slight decline of 20bps QoQ) mainly impacted by currency headwind and onsite/offshore impact. However, some parts will be mitigated by levers like improvement in business mix, increase in digital share and continued improvement in telecom space, the report said.

Key trackable this quarter

Commentary on capex for telecom industry and 5G play out.

Management comment on guidance of 8 percent to 10 percent CC growth in enterprise segment.

Margin outlook for FY20 and the leverages that will play out.

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First Published on May 21, 2019 11:23 am
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