Tech Mahindra Q4 profit drops 26%

Tech Mahindra, an Indian information technology services company, has reported a 25.8% fall in its Q4 profits as macroeconomic conditions remain challenging and clients look to tighten spending. The consolidated net profit for the quarter ending 31st March fell to INR 11.18bn ($136.7m), missing the analyst’s expectations of INR 13.20bn. The Pune-based firm’s new deal wins for the quarter were almost half at $592m from $1.01bn a year earlier.

The communication, media, and entertainment segment, which accounts for 40.1% of the total revenue, is down from 40.6% YoY. The firm reported consolidated revenue from operations came in at INR 137.18bn compared to INR 121.16bn YoY. Expenses rose 18.2% to INR 124.94bn.

Indian IT firms mostly derive their revenue from the United States and Europe. These regions are experiencing a recession amid turbulence in the banking industry. Tata Consultancy Services and Infosys Ltd, India’s top two IT exporters, have posted weaker-than-expected quarterly numbers, with both firms flagging a slowdown in the telecom and communication segment. Clients are contemplating spending cuts and project rampdowns to save cash.

Shares of Tech Mahindra closed up 0.69% on Thursday. The stock was down 1.3% YTD against the Nifty IT’s 4.4% fall. Despite the fall in profits and difficult macroeconomic conditions, the company remains committed to its goals of advancing its digital capabilities and accelerating innovation, as well as expanding its presence in key markets.