TECHM

Feb 28 (Reuters) - Tech Mahindra Ltd TEML.NS:

• TECH MAHINDRA LTD - APPROVES MERGER OF COMVIVA USA WITH COMVIVA AMERICAS

Source text: ID:nBSE1PkG54

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Feb 18 (Reuters) - Tech Mahindra Ltd TEML.NS:

• APPROVES MERGER OF WHOLLY-OWNED SUBSIDIARIES

Source text: ID:nBSE6dX802

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Jan 20 (Reuters) - Wipro's shares WIPR.NS surged about 8% on Monday, set for their best day in nearly four years, after India's No. 4 IT services company joined its peers in signaling a revival in demand.

The company beat third-quarter revenue and profit estimates on Friday and CEO Srinivas Pallia said, "We see discretionary spending slowly coming back" after facing macroeconomic challenges in 2024.

Wipro's shares were also among the top percentage gainers on the benchmark Nifty 50 .NSEI index, which was trading flat. At least eight brokerages raised their rating on Wipro's stock, while 16 raised their price targets, as per LSEG data.

"Wipro is witnessing a pick up in discretionary spends in its BFSI (banking, financial services and insurance) segment - evident from 11% y/y growth in revenue," Jefferies analysts said in a note, raising both their rating and price target.

The BFSI segment accounts for about a third of the company's revenue.

Wipro's bet of a more promising 2025 echoed similar indications from larger peers TCS TCS.NS, Infosys INFY.NS and HCLTech HCLT.NS.

India's $254 billion IT services sector has faced sluggish growth for several quarters due to global macroeconomic uncertainties and inflationary pressures, which have pushed clients to rein in spending.

($1 = 86.4390 Indian rupees)

(Reporting by Manvi Pant in Bengaluru; Editing by Savio D'Souza)

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** IT services provider Tech Mahindra TEML.NS down ~2% to 1,657.6 rupees ahead of Q3 results post the bell

** Analysts expect TEML's consol profit to more than double to 10.46 bln rupees (about $121 mln), rev to grow about 2% to 133.53 bln rupees -LSEG data

** However, BOBCAPS thinks TEML's higher exposure to European markets means global currency volatility hit profitability

** IDBI Capital see moderate sequential growth in rev and core profit margin on better large-deals execution, turnaround plan benefits

** IT index .NIFTIT down 2.7%, as Infosys INFY.NS falls on concerns over Q3 earnings quality

** Market leader TCS TCS.NS has posted tepid performance in key market and HCLTech HCLT.NS missed Q3 rev view

** Morgan Stanley notes slower demand recovery for industry

** Wipro WIPR.NS to report results later today, down 2.2%

($1 = 86.5760 Indian rupees)

(Reporting by Manvi Pant in Bengaluru)

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Dec 20 (Reuters) - Tech Mahindra Ltd TEML.NS:

• TECH MAHINDRA LTD - YABX TECHNOLOGIES ENTERS AGREEMENT WITH SC VENTURES AND FURAHA HOLDINGS

• TECH MAHINDRA - YABX ACQUIRES 1.2 MILLION ORDINARY SHARES, 1.8 MILLION C ORDINARY SHARES OF FURAHA

Source text: ID:nBSE4zqQyT

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By Haripriya Suresh

BENGALURU, Dec 20 (Reuters) - India's Tech Mahindra TEML.NS is stepping up focus on its banking, financial services and insurance (BFSI) business in a bid to bridge the gap with larger peers which have historically made more revenue from the lucrative segment, its CEO said in an interview.

Mohit Joshi, who took the helm of India's No.5 software services exporter in December 2023 after more than two decades at Infosys INFY.NS, wants to increase the share of BFSI in Tech Mahindra's revenue mix by up to 25% by March 2027, from about 16% currently.

Some of Tech Mahindra's peers in the $254 billion Indian IT sector already make as much as a third of their revenue from this sector.

"We still have a lot of room to catch up," said Joshi, who started out as a banker with ABN Amro and ANZ before joining Infosys. "I do expect that the relative share of BFSI revenue within TechM will increase, but...organically."

Unlike its peers, Tech Mahindra has relied heavily on telecom clients to boost revenue. That will change as Joshi tries to take advantage of his own expertise and experience dealing with financial services firms to turn the company around.

"BFSI is the single largest spender from a tech services perspective. It's very important for us to play aggressively in this space. Large banks typically spend over $10 billion a year in terms of technology," Joshi said.

Tech Mahindra, which has lagged its peers in both revenue and profit, will focus on core banking, payments, asset and wealth management and custodian services, as well as insurance, he said. Joshi has already shored up its BFSI leadership.

GENERATIVE AI

Generative artificial intelligence is a friend and not a foe for the sector, according to Joshi.

"GenAI is the best spokesperson for why we need more money to be spent on technology," he said, adding it is not the end of the road for software developers.

"I do feel that the overall demand for developers is not going to reduce, because there is a lot more work to be done candidly than there are people just now."

Joshi played down concerns about any potential hit to customer service roles at Tech Mahindra.

"I'm very skeptical about whether we'll see a wholesale replacement of contact centers with GenAI because when it comes to critical issues, people prefer to speak with human beings."

(Reporting by Haripriya Suresh; Editing by Dhanya Skariachan and Varun H K)

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Dec 11 (Reuters) - Tech Mahindra Ltd TEML.NS:

• ANNOUNCES MERGER OF EVENTUS SOLUTIONS GROUP WITH TECH MAHINDRA (AMERICAS)

Source text: ID:nBSE36HJYv

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Dec 2 (Reuters) - Tech Mahindra Ltd TEML.NS:

• APPROVES MERGER OF WHOLLY-OWNED SUBSIDIARIES

• PLAN OF MERGER OF TWO SUBSIDIARIES OF ALLYIS INC USA HAS BEEN APPROVED

Source text: ID:nBSE4TbmFB

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** Shares of India's Tech Mahindra TEML.NS climb ~3% to 1729 rupees

** IT firm's revenue rose 1.9% YoY, 0.7% sequentially

** Growth of 0.7% QoQ ahead of our estimate (0.3%); believe co on path of recovery with gradual turnaround underway - Antique

** Brokerage maintains "buy" rating; hikes PT to 1,875 rupees from 1,725 rupees

** Q2 results were "encouraging with revenue beat surprising positively," says Jefferies, but maintains "underperform" on rich valuations

** Co rated "hold" on an average - LSEG data

** TEML top pct gainer in Nifty IT index .NIFTYIT, which is flat on the day

** YTD stock has jumped ~36% vs 18% gains in NIFTYIT

(Reporting by Hritam Mukherjee in Bengaluru)

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** IT services firm Tech Mahindra TEML.NS rises 3.3% to 1,629 rupees, making it the top Nifty 50 .NSEI gainer

** CLSA upgrades to "outperform" from "hold", hikes TP to 1,749 rupees, citing likely expansion in profit margin

** Adds focus on BFSI, healthcare, manufacturing indicates more balanced industry mix with reduced telecom reliance

** Says the company's 15% EBIT margin target by FY27 is unambitious due to levers like offshoring, subcontracting

** Overall, analysts' avg rating on TEML is the equivalent of "hold"; median PT is 1,553 rupees -LSEG data

** TEML now up ~28% YTD, top performer on IT index .NIFTYIT which is up ~19%

(Reporting by Yagnoseni Das in Bengaluru)

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Sept 24 (Reuters) - Tech Mahindra Ltd TEML.NS:

• MITSUBISHI UFJ FINANCIAL GROUP SOLD AN INDIRECT INTEREST IN TECH MAHINDRA

• MUFG HAS 2.96% STAKE IN TECH MAHINDRA AS ON SEPTEMBER 19

• MUFG SOLD 2.05% STAKE IN TECH MAHINDRA

Source text for Eikon: ID:nBSE7ZrlHz

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** Shares of IT services firm Tech Mahindra Ltd TEML.NS end 1.5% lower at 1,604.65 rupees

** Stock biggest loser on blue-chip Nifty 50 .NSEI index and among IT stocks .NIFTYIT

** CLSA downgrades TEML to "hold" from "outperform", citing near-term stress in telecom, its biggest segment

** Tepid pace of 5G rollout as well as lack of cost saving deal announcements in recent months vs multiple deal wins by rivals among factors for downgrade - CLSA

** Brokerage adds TEML stock's YTD outperformance vs IT stocks and limited upside has resulted in stretched valuations

** Analysts on average rate TEML "hold", in line with most stocks on 10-member Nifty IT index

** TEML stock trims YTD gains to 26.4%, remains second-best performer on IT index

(Reporting by Nandan Mandayam in Bengaluru)

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July 25 (Reuters) - Tech Mahindra Ltd TEML.NS:

• TECH MAHINDRA Q1 CONSOL NET PROFIT 8.51 BILLION RUPEES; IBES EST. 8.77 BILLION RUPEES

• TECH MAHINDRA Q1 CONSOL REV FROM OPS 130.05 BLN RUPEES; IBES EST. 129.45 BLN RUPEES

• TECH MAHINDRA Q1 NET NEW DEAL WINS $534 MILLION

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Corrects paragraph 13 to say large order bookings are contract wins above $50 mln, not $100 mln

By Sai Ishwarbharath B and Haripriya Suresh

BENGALURU, July 18 (Reuters) - Infosys INFY.NS topped quarterly results estimates on Thursday as a recovery in demand from clients in its mainstay financial services business helped, prompting India's second-largest IT services firm to raise its yearly revenue forecast.

U.S.-listed shares of the Bengaluru-based company rose as much as 5.1% as of 1240 GMT.

"We had a very strong first quarter that is specifically focussed on volumes of financial services in the US," Chief Executive Salil Parekh said at a post-earnings conference.

"Large deals in the quarter also gave us more visibility of what we are seeing for the full year."

Infosys expects revenue growth of 3%-4% in the fiscal year 2025, up from its prior view of 1%-3%.

The company joined industry leader Tata Consultancy Services TCS.NS and smaller rival HCLTech HCLT.NS in reporting a strong quarter, raising hopes for the $254 billion sector which has been struggling with sluggish demand post a pandemic-induced boom.

"There is a recovery at play after five to six quarters of depressed spending," Investec analyst Nitin Padmanabhan told Reuters.

Consolidated revenue in the first quarter rose 3.6% to 393.15 billion rupees ($4.70 billion), beating the analysts' average estimate of 389.15 billion rupees, as per LSEG data.

Its banking and financial services posted a revenue rise of 0.3% after falling for four straight quarters.

IT clients had cut their spending on non-essential projects in recent quarters amid economic uncertainty and higher interest rates. Analysts expect that to change after the US Federal Reserve cuts interest rates and that nation's election outcome is out.

Net profit at Infosys rose 7.1% to 63.68 billion rupees in the quarter ended June, beating the analysts' average estimate of 62.53 billion rupees, as per LSEG data.

Operating margin rose 30 basis points year-on-year to 21.1% on better pricing.

Large order bookings - or contract wins above $50 million - came in at $4.1 billion for the quarter, against $4.5 billion in the fourth quarter and $2.3 billion a year ago.

The company also said it plans to hire 15,000-20,000 fresh graduates in the current fiscal year.

(Reporting by Sai Ishwarbharath B; Editing by Dhanya Skariachan and Nivedita Bhattacharjee)

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June 25 (Reuters) - Tech Mahindra Ltd TEML.NS:

• PLAN OF MERGER OF UNIT HEALTHNXT INC. WITH ITS PARENT COMPANY TECH MAHINDRA (AMERICAS) HAS BEEN APPROVED

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By Sai Ishwarbharath B

BENGALURU, May 22 (Reuters) - Mid-tier firms in India's $254 billion information technology sector took market share from industry goliaths in recent quarters as clients curtailed discretionary spending amid inflationary pressures and economic uncertainty, analysts said.

Unlike their larger rivals such as Tata Consultancy Services TCS.NS and Infosys INFY.NS, mid-tier IT firms tend to focus on short-term deals aimed at helping clients cut costs rather than chase large-scale projects.

The practice has paid off in an environment of slowing demand in prominent markets such as North America and Europe.

LTIMindtree LTIM.NS, Coforge COFO.NS, Mphasis MBFL.NS and Persistent Systems PERS.NS are "increasingly viewed as challengers in (winning) Fortune 500 accounts, aiding the share gain process," Kotak Institutional Equities said.

The smaller companies could outperform their larger rivals further once discretionary spending improves, Kotak analysts Kawaljeet Saluja, Sathishkumar S and Vamshi Krishna said.

This should set the mid-tier IT firms up well as they try to win more budget-conscious clients in an economic backdrop where U.S. interest rates are expected to stay "higher for longer". Industry body Nasscom estimated overall revenue growth more than halved to 3.8% last financial year.

"In the current macro environment, clients are increasingly looking at service providers (that) deliver services at lower and predictable costs with better business outcomes," said Avinash Baliga, partner at consulting firm Avasant.

Persistent Systems CEO Sandeep Kalra and Mphasis CFO Manish Dugar confirmed the market share gains. India's larger IT firms did not respond to Reuters' requests seeking comment.

"We are able to hold our own and win against the larger piers as clients are looking for competency and not scale," Dugar told Reuters.

The market share of India's top five IT firms fell 17 basis points in 2023, reflecting the inroads made by the mid-tier IT firms, according to BNP Paribas data shared exclusively with Reuters. However, the top five IT firms still owned 88.35% of the market as of December 2023 among the top 10 firms.

On the stock market, share prices of Mphasis and Persistent Systems advanced 23.7% and 42.5% respectively in the last 12 months compared to a 16% gain in the broader Nifty IT Index.

In April, Infosys forecast fiscal 2025 revenue growth between 1% and 3% in constant currency terms, while most analysts had expected it to be at least in the range of 2% to 5%.

"Due to the sheer size they have reached, larger players have given muted guidance," said Ashok Soota, founder of mid-tier IT firm Happiest Minds Technologies HAPP.NS , which also gained market share. "We need to be humble about this as (our) market share is (relatively) small on the grand total."

(Reporting by Sai Ishwarbharath B; Editing by Dhanya Skariachan and Shri Navaratnam)

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** Shares of Tech Mahindra TEML.NS up 1.9% to 1,303.35 rupees

** Stock among top pct gainers on benchmark Nifty 50 index .NSEI, which is up 0.3%

** Brokerage Morgan Stanley double-upgrades TEML stock to "overweight" from "underweight", raises PT to 1,490 rupees from 1,190 rupees, CNBC-TV18 reports

** Rating change follows TEML announcing its three-year turnaround plan aimed at increasing revenue and doubling operating margin; however, Q4 rev missed estimates

** Stock hit 8-year high on Friday post results; expansion plan in focus for analysts

** Avg PT among analysts now at 1,260.8 rupees compared to 1,301.21 rupees a month earlier - LSEG data

** Avg rating by analysts is "hold"; stock is fifth-most expensive stock with a fwd 12-mth PE of 25 on the 10-member Nifty IT index .NIFTYIT

(Reporting by Varun Vyas in Bengaluru)

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BENGALURU, April 26 (Reuters) - Tech Mahindra TEML.NS shares jumped 13.2% on Friday, their biggest intraday gain in nearly eight years, after India's No.5 IT company announced a turnaround plan that offered succour following declining revenue growth for the past three quarters.

The stock was up 8.6% at 1,292.25 rupees as of 11.48 a.m. IST, leading gains on the Nifty IT index .NIFTYIT, which was up 1.8%.

Including the day's move, Tech Mahindra is up 2% so far this year compared with a 4% fall in the IT index. Larger rival Infosys INFY.NS was down 6.8%, while Tata Consultancy Services TCS.NS was up 2.2%.

The Pune-based Tech Mahindra laid out a three-year plan on Thursday, aimed at increasing revenue and doubling operating margin to 15% by fiscal 2027. The company reported a fall in revenue between 2% to 6.2% in rupee terms in the last three quarters, including the March quarter.

Brokerages welcomed the company's turnaround plan, with HSBC writing, "The new transformation plan looks quite sensible - acknowledging the need (for) investment in sales and to manage costs to expand margins. However, we believe the path to this turnaround is going to be challenging, at best."

However, execution remained a concern. "While management's plan is comprehensive, its execution amidst a weak demand environment carries risk," Jefferies said.

Market leader Tata Consultancy Services TCS.NS missed revenue estimates, although it said a strong deal pipeline will drive growth this fiscal year.

At least 13 analysts cut their target price for Tech Mahindra, while two raised after the results, with the median price target falling to 1,289.50 rupees from 1,320.50 rupees in March, as per LSEG estimates.

(Reporting by Sai Ishwarbharath B; Editing by Janane Venkatraman )

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April 25 (Reuters) - Tech Mahindra Ltd TEML.NS:

• Q4 CONSOL NET PROFIT 6.61 BILLION RUPEES; LSEG IBES PROFIT EST. 7.57 BILLION RUPEES

• Q4 NET NEW DEAL WINS $500 MILLION

• DIVIDEND 28 RUPEES PER SHARE

• Q4 CONSOL REVENUE FROM OPERATIONS 128.71 BILLION RUPEES; LSEG IBES EST. 129.55 BILLION RUPEES

• YR AGO Q4 CONSOL NET PROFIT 11.18 BLN RUPEES, REV 137.18 BLN RUPEES

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Adds analyst comments paragraphs 6,8,9; background on new CEO in paragraphs 2,16

By Haripriya Suresh and Sai Ishwarbharath B

BENGALURU, April 6 (Reuters) - Wipro WIPR.NS Chief Executive Officer Thierry Delaporte resigned on Saturday following a fraught few years for India's No. 4 IT services company, to be succeeded by the head of its biggest market.

Srinivas Pallia, a veteran of the company, will take over as CEO and managing director from April 7, Wipro said in a statement, adding Delaporte was leaving to "pursue passions outside the workplace".

The Bengaluru-based software services exporter has had a turbulent few years, with its operating model changing twice in three years, several top-level departures, and some expensive acquisitions that did not translate to growth.

Delaporte, whose five-year term was originally set to end in July 2025, said that he was "proud of the solid foundation" he had helped to lay for Wipro.

Some industry watchers did not share his assessment of his time at the helm.

"He was not spending nearly enough time visiting his teams in India or the U.S. The morale at Wipro was at an all-time low," said HFS Research founder Phil Fersht.

Wipro is likely to be the only one of India's top four IT firms to end the most recent fiscal year with a drop in revenue.

Pallia, who joined Wipro in 1992, was the right choice to succeed Delaporte, said Ray Wang, principal analyst and founder of Constellation Research.

"Pallia is the best bet they have right now and they will have to work hard to bring back (the) good people who have left and develop the next generation of Wipro," he added.

He takes over at a time when the company and the larger $254 billion Indian IT industry grapples with weak client spending amid inflationary pressures and economic uncertainty in key markets such as the United States and Europe.

Wipro has struggled to win large deals, and won its only mega deal under Delaporte in December 2020, with German retailer Metro AG.

TOUGH TASK AHEAD

Pallia's priority should be to retain talent and boost the image and morale of the company, said Pareekh Jain, the founder of IT research firm EIIR Trend.

He should also help Wipro "buck up and win large deals" to catch up with larger rivals such as Tata Consultancy Services TCS.NS and Infosys INFY.NS, Jain added.

Delaporte could not immediately be reached for further comment.

Pallia has been head of Wipro's Americas 1 market, a role in which he oversaw healthcare, consumer goods, life sciences, retail, and other sectors. Based out of New Jersey, he will report to company Chairman Rishad Premji.

Wipro's rivals have also seen changes at the top. Industry leader Tata Consultancy Services promoted insider K Krithivasan to CEO last year after Rajesh Gopinathan quit abruptly, while Infosys veteran Mohit Joshi took over as Tech Mahindra TEML.NS CEO in December 2023.

LTIMindtree LTIM.NS has identified two internal candidates for its top job, as it is unlikely to extend CEO Debashis Chatterjee's term that is set to end next year, sources told Reuters earlier this year.

(Reporting by Haripriya Suresh and Sai Ishwarbharath B; Editing by Mark Potter, Dhanya Skariachan and Ros Russell)

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March 6 (Reuters) - Tech Mahindra Ltd TEML.NS:

• GETS INCOME TAX ORDER FOR PENALTY OF 57.5 MILLION RUPEES

• INCOME TAX PENALTY OF 187.3 MILLION RUPEES

Source text for Eikon: ID:nBSE45Dz6C

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By Sai Ishwarbharath B

MUMBAI, Feb 27 (Reuters) - Global companies are setting up more offices in India and expanding in-house teams but that does not mean the end of the road for Indian IT firms, which rely heavily on outsourcing deals, executives said at a Nasscom event last week.

Companies opened 118 global capability centers (GCCs) in India over the past two years in a boost to 'insourcing' efforts, taking their total count to over 1,620, February data from the industry body showed.

IT firms are helping GCCs scale up, innovate and do much more, said Ananth Chandramouli, the India managing director of French IT firm Capgemini CAPP.PA.

"We are also helping their platforms and solutions to go to market. Now GCCs are (being) made a revenue center from a cost center, and it is net new revenue for both of us. It will not cannibalize our revenues," he said.

Other industry insiders agreed.

Satish HC, executive vice president and co-head of delivery at India's No.2 software services exporter Infosys INFY.NS, said its strategy was to work with GCCs, no matter which route they took to drive innovation.

"If somebody wants to scale up their captive (offshore unit), we will co-exist and work with them. If somebody wants to create a captive and ask us for a BOT (build-operate-transfer) deal, we will be glad to do a BOT deal," he said, adding that it was important to "be collaborative and not be prescriptive".

The comments come as some industry watchers are cautioning that India's rise as a GCC powerhouse could dent the revenue of IT firms, which have made a fortune by helping address overseas clients' tech needs.

"Overall revenue growth can be impacted for companies with high exposure to heavily insourcing clients," Kotak Institutional Equities said in a December note, referring to the banking, financial services and insurance sectors in particular.

"While insourcing has been on the rise, it has not reached alarming levels yet."

Attendees at the Nasscom event sang a different tune, saying that the two models could co-exist.

"MNCs are not taking outsourced spend and rechanneling it to GCCs, most of the GCC ramp-up is driven by migration of existing insourced spend," said Anuj Kadyan, senior partner at consulting firm McKinsey.

Some said the pie was big enough for everyone.

"There is enough tech spends to be shared between GCCs and traditional IT players. The usual ratio is 60% is insourced and 40% with outsourced partners," said SAP Labs India Managing Director Sindhu Gangadharan. "We don't see any changes in that."

(Reporting by Sai Ishwarbharath B; Additional reporting by Haripriya Suresh; Editing by Dhanya Skariachan and Varun H K)

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Feb 20 (Reuters) - Tech Mahindra Ltd TEML.NS:

• ACQUISITION OF 100% STAKE IN ORCHID CYBERTECH SERVICES INC

• COST OF ACQUISITION IS AUD 5 MILLION

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Feb 16 (Reuters) - India's technology sector is expected to grow at a slower pace this fiscal year as clients hold back spending and delay decision-making, its main industry body said on Friday.

The National Association of Software and Service Companies (Nasscom) expects the industry's revenue to grow 3.8% to $253.9 billion, compared with the previous fiscal year's 8.4%.

The expansion this year will likely be driven by lower- to mid-single-digit contributions from all segments, including information technology, business process management, software products, engineering research and development, Nasscom said.

Software exports, comprising services and sale of products to clients, fell 3.3% to $199 billion as opposed to a 11.4% growth in the previous year.

The sector is expected to add 60,000 jobs on a net basis, a nearly 80% drop from the previous year's addition of 290,000 jobs.

However, the industry's total headcount increased to 5.43 million from 5.37 million a year earlier.

The industry body did not disclose the geographical or industry-specific distribution of the revenue.

The current fiscal was marked by a lot of uncertainties and slow decision-making, Sangeetha Gupta, senior vice president at Nasscom, said. "So if a project that should (have) got started in a quarter got pushed down by six months, you're seeing that impact on revenue growth," Gupta said, adding that there was a "correction in spending" after COVID-related boom.

The pandemic pushed clients to enhance their digital investments, especially in sectors such as retail, banking and financial services amid curbs on movement.

However, the surge in investments started fading since the beginning of this fiscal year due to global macroeconomic uncertainties.

There is some "reversal" of sentiments in 2024 as US recession fears are weakening, Nasscom President Debjani Ghosh said.

(Reporting by Sai Ishwarbharath B; Editing by Dhanya Ann Thoppil)

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Shares of India's Tech Mahindra TEML.NS fell as much as 6.2% on Thursday after the company's third-quarter profit missed estimates.

The country's fifth-largest IT services company on Wednesday said profit slumped 60.6% from the previous year to 5.10 billion rupees ($61.4 million) for the three months ended Dec. 31, missing analysts' estimate of 6.17 billion rupees, according to LSEG data.

($1 = 83.1200 Indian rupees)

(Reporting by Ashish Chandra in Bengaluru; Editing by Dhanya Ann Thoppil)

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Adds CEO, analyst comments

MUMBAI/BENGALURU, Jan 24 (Reuters) - India's Tech Mahindra TEML.NS posted a 60.6% drop in third-quarter net profit on Wednesday, missing estimates as clients continued to hold back spending in communications and banking segments.

The fifth-largest Indian IT services company's net profit fell to 5.10 billion rupees ($61.36 million) for the three months ended Dec. 31, 2023, from 12.97 billion rupees a year earlier.

Analysts, on average, expected a profit of 6.17 billion rupees, according to LSEG data.

In the first quarter after Mohit Joshi took over as the chief executive officer, the company reported a revenue of 131.01 billion rupees, compared with analysts' estimates of 128 billion rupees.

Operating margins fell 660 bps to 5.4% from the same period last year, while new deal wins more than halved to $381 million from $795 million.

India's $245-billion IT industry has been hurting due to an uncertain demand environment as clients cut back on spending amid inflation and recession fears.

Tech Mahindra's growth was hit due to a weakness in the communications, media and entertainment vertical, its largest in terms of revenue, which dropped 13.4%.

The company has been trying to exit non-core, low-margin businesses to improve profitability for the past few quarters.

Joshi said the outcome was "mixed" for the quarter, with growth in the manufacturing and healthcare segments, but spending remained muted in areas like communications, BFSI and hi-tech.

"These segments were impacted by furloughs ... we may continue to see some impact in hi-tech and Australia (business) in Q4 too."

Tech Mahindra's peers reported mixed numbers, but the commentary largely indicated that the demand environment has not worsened sequentially, as was feared.

Elara Capital analyst Ruchi Burde Mukhija said revenue and margin were a "surprising" beat, but deal wins were weak.

"We reckon this quarter to be the one to mark the turnaround in Joshi's regime," she added.
The company's shares closed 3.02% higher ahead of the results.

($1 = 83.1120 Indian rupees)

(Reporting by Haripriya Suresh and Sai Ishwarbharath B; Editing by Sohini Goswami)

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Dec 19 (Reuters) - Tech Mahindra Ltd TEML.NS:

• GURNANI CEASES TO BE THE MANAGING DIRECTOR & CEO

Source text for Eikon: [ID:]

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Nov 20 (Reuters) - Tech Mahindra Ltd TEML.NS:

• ENTERED INTO A COLLABORATION DEED WITH NEOM TECH AND DIGITAL COMPANY

• TO FORM JOINT VENTURE CO WITH NEOM TECH AND DIGITAL COMPANY

• NEOM TECH AND DIGITAL WILL INITIALLY BE GRANTED EQUITY WARRANTS IN JVCO

• NEOM TECH AND DIGITAL BASED ON JVCO ACHIEVING SPECIFIED REVENUE THRESHOLDS, MAY BE GRANTED ADDITIONAL EQUITY WARRANTS

• NEOM TECH AND DIGITAL CAN CONVERT WARRANTS INTO SHARES OF JVCO

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Nov 10 (Reuters) - Mahindra and Mahindra Ltd MAHM.NS:

• INITIATING TRANSFORMATION JOURNEY IN TECH MAHINDRA BUSINESS

Source text for Eikon: ID:nBSE1cHddJ

Further company coverage: MAHM.NS

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BENGALURU, Oct 26 (Reuters) - Shares of Indian IT services company Tech Mahindra TEML.NS fell as much as 3.7% in early trade on Thursday, a day after the company posted its biggest profit drop in 16 years.

The company reported a 61.6% fall in its consolidated net profit for the September quarter, its worst performance since March 2007.

(Reporting by Kashish Tandon in Bengaluru; Editing by Sohini Goswami)

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