India’s Tech Mahindra misses Q3 revenue view on telecom weakness

MUMBAI/BENGALURU :Indian software services provider Tech Mahindra reported lower-than-expected third-quarter revenue on Friday on weak demand in its mainstay telecom segment.

The company’s revenue rose 1.4 per cent to 132.86 billion rupees ($1.53 billion) in the three months ended Dec. 31. Analysts, on average, expected revenue of 133.53 billion rupees, according to data compiled by LSEG.

The share of the revenue earned from the United States and Europe markets declined by 2.3 per cent and 1 per cent respectively.

For several quarters, companies in the $245-billion Indian IT sector have been grappling with clients cutting back on discretionary spending amid macroeconomic concerns and higher borrowing costs.

Revenue from the telecom segment, which contributes to a third of Tech Mahindra’s revenue, declined 5.6 per cent on-year.

The Pune-based firm reported a revenue growth of 8.3 per cent in its banking, financial services, and insurance (BFSI) vertical, and a 3.5 per cent rise in its media segment.

Its net profit surged 93 per cent to 9.83 billion rupees in the quarter but failed to meet analysts’ average estimate of 10.46 billion rupees.

Tech Mahindra’s order bookings nearly doubled to $745 million from $381 million in the same quarter last year, which Chief Executive Officer Mohit Joshi attributed to “improved rate of deal wins”.

The company’s shares closed about 2 per cent lower ahead of the results.

Earnings of larger peers such as Tata Consultancy Services, Infosys, and HCLTech were a mixed bag, but highlighted a pickup in discretionary spends and a modest recovery in the BFSI segment.

($1 = 86.5770 Indian rupees)

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