Tech Mahindra dips 4% as Q3 margins disappoint
Published On: Wednesday, February 2, 2022 | By: Team KnowMyStock
Shares of Tech Mahindra dipped 4 percent to Rs 1,444 on the BSE in Wednesday’s intra-day trade after the IT firm's earnings before interest and tax (EBIT) margin declined by 40bps quarter-on-quarter (QoQ) to 14.8 percent in the December quarter (Q3FY22) due to salary hikes, higher sub costs, and lower utilization due to aggressive fresher hiring, impacted Tech Mahindra's margins during the quarter. In constant currency terms, the company saw a decent 4.7% revenue growth, sequentially, led by improved growth in the communications, media & entertainment, and enterprise verticals. In a post-earnings conference call, the management said that it remains confident of sustaining revenue growth momentum on the back of broad-based demand across verticals.However, the company’s management remains confident of maintaining EBITM with an upward bias on the back of revenue growth-led operating leverage, employee pyramid rationalization, subcontracting costs optimization,
increase in utilization (85-88 per cent targeted range), pricing, and offshore shift, which will offset the impact of supply-side challenges (recruitment and retention costs) and expected normalization of travel costs and SG&A expenses, analyst at Emkay Global Financial Services said in result update.
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