Tech Mahindra Q1 profit may fall over 15%, dollar revenue degrowth could be 1% QoQ

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26 Aug, 2025 12:21

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Software services company Tech Mahindra is expected to report more than 15 percent sequential decline in profitability and one percent fall QoQ in dollar revenue for the quarter ended June 2019, according to brokerages.

The delay in deal ramp up in enterprise business, the slowdown in telecom growth and seasonality in Comviva business may hit topline growth.

"We expect dollar revenues to decline 1 percent QoQ to $1,255 million on the back of a delay in the deal ramp up in the enterprise and Comviva seasonality. Rupee revenues may de-grow 1.9 percent QoQ to Rs 8,725 crore," said ICICI direct which expects profit to fall 18.2 percent sequentially.

Prabhudas Lilladher also sees dollar revenue falling 1 percent QoQ and constant currency revenue declining 0.7 percent QoQ. "We have built a revenue decline of 3.5 percent QoQ in dollar terms in the communication segment due to Comviva seasonality and flat growth 0.7 percent QoQ in dollar terms in enterprise vertical."

According to Lilladher, profit is likely to fall 17 percent QoQ.

At operating level, Tech Mahindra's earnings before interest and tax margin may contract in triple-digit sequentially due to a wage hike, visa cost and currency headwind.

Kotak expects sequential EBIT margin decline of 250 bps contributed by -- (1) 100 bps impact from wage revision, (2) higher visa applications, (3) Rupee appreciation and (4) seasonal impact of lower Comviva revenues.

The brokerage further expects robust new deal signings with good spread across enterprise and telecom segments.

Key issues to watch out for would be commentary on 5G and related impact on company's communications vertical, outlook for BFSI, health of enterprise business especially in the manufacturing vertical where the company has high exposure to the auto sector, deal wins on the back of two quarters of above-average total contract value, and proportion of wins in the enterprise segment.

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