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Tech Mahindra Q1 results update!

Tech Mahindra Q1 results update!

Last updated: 28 Jul, 2020 | 08:47 am

Tech Mahindra Q1 results update!
  • Profit beats estimates: Tech Mahindra has reported a flat 1.36% on-year rise in net profit to ₹972.30 crore in Q1FY21, beating analyst estimates. Analysts had earlier estimated a profit of about ₹750 crore.
  • Revenue up: The company’s revenue came in-line with estimates at ₹9,016 crore, up 5.2% on-year. During the quarter, the revenue has registered a decline in five out of the six segments on a QoQ basis. The table below shows Tech Mahindra’s revenue growth across the segments.  
  • Operating margins improve: ‘Despite the challenges in the quarter, Tech Mahindra was able to protect its margins, on the back of cost optimization efforts.’ Its EBIT margin expanded to 10.1% from 7.7% in Q4FY20.

The first-quarter results were expected to be affected the most, due to the lockdown imposed on March 24th. Given the circumstances, Tech Mahindra has posted a decent set of numbers. The pandemic has had a lesser impact on the IT sector, and most of the company have reported better-than-anticipated results in Q1FY21. 

The Covid-19 pandemic has forced a tectonic shift in businesses processes to move towards greater digitization. In fact, Tech Mahindra has said that many of its customers are adopting new age technologies as businesses across the globe are actively pursuing digital transformation. The company believes that it is well-positioned to capture such spends and endeavours to be back on the growth path, amid increased signs of demand normalization. 

The stock has gained about 45% from its 52-week low on March 23th. The shares are trading at a PE of 14.06 as compared to the sector PE of about 23.40 times. 

Our VGQM model has a BUY rating on the stock.

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