Tech Mahindra up 13%

Tech Mahindra is the top gainer on the BSE since the opening bell today, with the market ignoring its muted earnings and instead celebrating its roadmap ahead.

Though YoY, there is a 41% drop in consolidated net profit for Q4FY24, QoQ, its up 29.5% at Rs.661 crore. This has come way below all estimates.

Revenue was down 2% (QoQ) at 12,871 crore. EBIT margin was good at 7.4% v/s 5.4% (QoQ).

It ended FY24 with a 2% drop in revenue at Rs.51,966 crore on which net profit came in at Rs.2358 crore, down 51%.

The Board declared a final dividend of Rs.28/share on Rs.5 FV for FY24.

What really enthused the market was the CEO and MD of the company, Mohit Joshi, putting forth a 3-year roadmap to turn around the IT services major’s slowing business, with an aim to drive better revenue growth than peer average and optimising margin improvement by FY27. Calling it ‘Vision 2027’ the aim is to focus on organisational restructuring, phased business improvements and investments, along with utilising synergies with the larger Mahindra Group businesses.

Elaborating on the plans, Mr.Joshi said that the turnaround will be happening in phases based on the fiscal year. In FY25, Tech Mahindra will be in a ‘turnaround phase’; FY26 will be ‘Stabilisation Phase’ and FY27 will be ‘Reaping Returns’ phase.

It plans to go aggressive on building its telco, manufacturing, BFSI and AI verticals.

The company, by FY27, wants to expand its EBIT margin to 15% and have higher topline growth as compared to peer average of top six-seven IT services players.

The stock showed an over 5x jump in volumes, opening 4.5% higher to Rs.1245 and rising over 13% to hit an intraday high at Rs.1345. Its 52-week high is at Rs.1416.