Tech Mahindra hits 3.5 year low

What a spectacular fall Tech Mahindra has shown in the morning trades! From Friday’s close of Rs.429.35, the stock plunged to hit a new 3.5 year low at Rs.357.60, a 17% sharp drop.

There is huge disappointment over the company’s Q4FY17 performance; not only did it miss all estimates but net profit fell 30% (QoQ) to Rs.590 crore v/s Rs.845 crore. Revenue was down marginally from Rs.7557 crore to Rs.7495 crore though revenue in dollar terms rose 1.4% to $1,131 million.

EBIT was down 34% at Rs.615 crore and margins declined from 12.4% to 8.2%. The company attributed this fall to restructuring of some contracts in LCC business, re-alignment in some legacy deals and rupee gain.

It was the other income of Rs.238 crore, up 53% (QoQ) and forex gain of Rs.162 crore, up 80% which helped shore the bottomlines or else the fall would have been more precipitous.

Only good news here- attrition has come down from 18% to 17% but then again, given the volatile environment in the IT sector, no one wants to really take a chance changing jobs.