Tech Mahindra Share Price Rises Over 4% As Q2 Profit Beats Estimates

Tech Mahindra Ltd.'s share price was up over 4% on Monday after it posted a 45.4% uptick in the net profit for the second quarter of the current fiscal. 

The IT major on Saturday announced a profit of Rs 1,257.5 crore, beating the Bloomberg analyst estimate of Rs 1,013 crore. Revenue from operations stood at Rs 13,313.2 crore, up 2.4% sequentially and 3.5% on a year-on-year basis, meeting the Street's expectations. In constant currency terms, revenue grew 0.7% QoQ and 1.2% YoY. 

The company also announced an interim dividend of Rs 15 per share at a face value of Rs 5 each. The company has set Nov. 1 as the record date for determining the eligible members entitled to receive the dividend, according to an exchange filing on Saturday.

• Revenue up 2.4% at Rs 13,313.2 crore (Bloomberg estimate: Rs 13,211 crore).

• Net profit rose 45.4% to Rs 1,257.5 crore (Estimate: Rs 1,013 crore).

• EBIT increased 16.2% to Rs 1,280.4 crore (Estimate: Rs 1,228 crore).

• Margin expanded 114 basis points to 9.61% (Estimate: 9.3%).

Revenue from manufacturing, and healthcare and life sciences dipped 4% and 1.8% respectively in the quarter. However, communications rose 2.7%, high-tech and media grew 5.7%, banking, financial services and insurance rose 2.4% and retail, transport and logistics grew 5.6%.

"We continue to progress on our strategic improvement efforts even as the overall IT services industry has remained soft," Chief Executive Officer Mohit Joshi said. "We see weakness in communication and manufacturing verticals, as discretionary spends remain conservative."

Tech Mahindra share price rose as much as 4.38% during the day to Rs 1,761.85 apiece on the NSE. It was trading 2.40% higher at Rs 1,728.40 apiece, compared to a 0.22% decline in the benchmark Nifty 50 as of 9:39 a.m. 

It has risen 50.78% in the last 12 months and 35.86% on a year-to-date basis. The total traded volume so far in the day stood at 16 times its 30-day average. The relative strength index was at 64.14.

Twenty out of the 44 analysts tracking the tech major have a 'buy' rating on the stock, 10 recommend a 'hold' and 14 suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 6.1%.