Tech Mahindra falls 5% on profit booking post Q4 results

Shares of Tech Mahindra have dipped 5% to Rs 668 per share on the BSE in early morning trade on profit booking after the company reported a better than expected 29.6% quarter-on-quarter growth in its consolidated net profit at Rs 12.22 billion in March 2018 quarter (Q4FY18). The S&P BSE Sensex was trading 0.61% or 214 points higher at 35,139 points at 10:42 am.
Operational revenue grew 3.6% at Rs 80.54 billion on sequential basis. In dollar terms, Tech Mahindra reported 2.9% sequential growth in revenue at $ 1,244 million during the quarter.

Analysts on an average had expected profit of Rs 9.32 billion and revenue of Rs 79.42 billion for the quarter.

Tech Mahindra has reported 120bps improvement in EBITDA margins for the quarter at 17.5% led by sharp improvement in utilization, seasonal tailwind from mobility business, improved business mix and favourable currency. Company has reported margin beat in each of the four quarters in FY18 and Q4FY18 EBITDA margin is up 550bps YoY.

“The company is confident of the FY19 demand outlook, with improvement in growth in telecom business and expects enterprise business to grow in line with industry growth. There is lot of activity on 5G technology however; it is difficult to give a timeline for 5G related spends. Company expects further benefits from the margin improvement program to accrue over next 4 quarters driven by automation, improvement in performance of portfolio companies and increase in offshore proportion,” analysts at Antique Stock Broking said in Q4FY18 result review.