Result Analysis: Tech Mahindra Limited (CMP: Rs.1,004) Result Update: Q4FY23

Tech Mahindra is one of the leading provider of consulting-led integrated portfolio services to customers around the globe. It also provides comprehensive range of IT services, including IT enabled services, application development and maintenance, consulting and enterprise business solutions, extended engineering solutions and infrastructure management services to a diversified base of corporate customers in a wide range of industries including insurance, banking and financial services, manufacturing, telecommunications, transportation and engineering services.


    Open FREE* Demat & Trading Account & ₹0 AMC for first year

    Stock Details
    Market Cap. (Cr.) 97825.42
    Equity (Cr.) 487.08
    Face Value 5
    52 Wk. high/low 1297 / 944
    BSE Code 532755
    NSE Code TECHM 
    Book Value (Rs) 275.46
    Sector IT – Software


    Key Ratios
    Debt-equity: 0.11
    ROCE (%): 23.78
    ROE (%): 21.76
    TTM EPS: 53.58
    P/BV: 3.65
    TTM P/E: 18.74

    Result Highlights:

    • Tech Mahindra posted muted results in the March 23 quarter with Revenue decrease of -0.1% QoQ to Rs.13,718 cr. and Net profits decrease of 12.5% QoQ to Rs.1,125 cr. majorly due to the macro headwinds and decline in discretionary spending.
    • EBIT of the company declined by 7% QoQ to Rs.1,530 cr. and EBIT margin declined with 80 bps to 11.2% compared to previous quarter.
    • Among industries communication and manufacturing segments’ revenue% have grown up by 30bps and 20bps respectively while Retail, Transport & logistics segment revenue % de-grew by 90bps. BFSI and Technology segment were flat on QoQ basis in the quarter.
    • Across geographies, Europe revenue% increased by 90 bps while America de-grew by 10 bps on QoQ basis. While revenue% from Rest of the world showed de-growth of 80 bps on QoQ basis.
    • Net New Deal wins of the company has dropped significantly (26%QoQ down) due to the cautious stands of the client to USD 0.59bn in the quarter vs USD 0.79bn of Q3FY23.
    • Attrition rate has improved by 200 bps from 17% in the December 22 quarter to 15% in this quarter. Company has reduced its total headcount by 4,668 QoQ, now counts to 1,52,400.
    • The board of the company has recommended a final dividend of Rs.32/share.

    Financial Performance:

    Shareholding Pattern:

    Particulars (In %) Q4FY23 Q4FY22
    Promoters Group 35.18 35.26
    FIIs 27.9 35.21
    DIIs 25.85 18.05
    Public 10.43 10.55
    Others 0.64 0.93

    Management Commentary:

    • The management highlighted the macro environment remains weak considering slower decision making and cuts in discretionary spending and will impact the growth in H1FY24 as well.
    • Some of the discretionary spends and transformation projects are going through additional lenses before getting released.
    • Management informed that the client specific issues in top 5 clients are bottoming out and is expected to stabilize in the near term.
    • Company stated that cloud, 5G and AI are providing better future growth opportunities.


    Tech Mahindra has subdued performance in Q4FY23 with 0.1% de-growth in the revenue and 12.5% de-growth in the PAT on quarterly basis. Deal decisions have been delayed due to uncertain macros which has resulted in lower deal wins. Revenues from top 5 clients have dropped significantly over the past year. Near term headwinds still prevail for the IT companies on the back of recession fears in Europe and America. Hence, we remain negative on the stock for the short term.


    Particulars (In Rs. Cr.) Q4FY23 Q3FY23 Q4FY22 QoQ% YoY% FY23 FY22 YoY%
    Revenue from Operations 13,718 13,735 12,116 -0.1% 13.2% 53,290 44,646 19.4%
    Other Income 306 247 320 23.6% -4.5% 965 1,112 -13.2%
    Total Income 14,024 13,982 12,436 0.3% 12.8% 54,255 45,758 18.6%
    Employee Benefit Expenses 7,192 7,055 6,048 1.9% 18.9% 27,692 22,286 24.3%
    Employee benefit Expenses as % of Sales 52.4% 51.4% 49.9% 110 bps 250 bps 51.96% 49.92% 200 bps
    Subcontracting Expenses 1,936 1,974 1,907 -1.9% 1.5% 8,000 6,957 15.0%
    Depreciation & Amortisation Expense 490 498 484 -1.6% 1.2% 326 163 100.2%
    Other Expense 2,570 2,562 2,074 0.3% 23.9% 9,569 7,383 29.6%
    EBIT 1,530 1,646 1,604 -7.0% -4.6% 6,072 6,500 -6.6%
    EBIT Margin 11.2% 12.0% 13.2% -80 bps -210 bps 11.4% 14.6% -320 bps
    Profit After Tax (PAT) 1,125 1,285 1,545 -12.5% -27.2% 4,831 5,566 -13.2%
    PATM (%) 8.2% 9.4% 12.8% -1.2% -4.6% 9.07% 12.47% -340 bps
    EPS (in Rs.) 12.67 14.7 17.09 -13.8% -25.9% 54.8 63.32 -13.5%
    Segment Revenue (In Rs. Cr.) Q4FY23 Revenue % Q3FY23 QoQ% Q4FY22 YoY%
    IT 11,797 86.0% 11,800 -0.02% 10,593 11.37%
    BPO 1,921 14.0% 1,935 -0.72% 1,524 26.06%
    Total 13,718 100% 13,735 -0.12% 12,116 13.22%
    Geography Revenue % Q4FY23 Q3FY23 Q4FY22 QoQ YoY
    America 49.6 49.7 48.3 -10 bps 130 bps
    Europe 25.3 24.4 26.4 90 bps -110 bps
    Rest of the World 25.1 25.9 25.3 -80 bps -20 bps
    Segment Revenue % Q4FY23 Q3FY23 Q4FY22 QoQ YoY
    Communications, Media & Entertainment 40.10% 39.80% 40.60% 30 bps -50 bps
    Manufacturing 15.90% 15.70% 14.90% 20 bps 100 bps
    Technology 10.30% 10.30% 9.30% 100 bps
    Banking, Financial Services & Insurance 15.90% 15.90% 17.40% -150 bps
    Retail, Transport & Logistics 7.60% 8.50% 7.60% -90 bps
    Others 10.20% 9.90% 10.20% 30 bps
    Source: Company website, EWL Research

    Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014

    Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
    For analyst certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
    Disclosure Appendix
    Analyst Certification (For Reports)
    Israil Khan, Elite Wealth Limited,
    The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
    As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
    (1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
    (2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
    For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
    Research Excerpts
    This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit
    Company-Specific Disclosures
    Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting, or emailing with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail
    Options related research:
    If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at
    Other Disclosures
    All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
    Ownership and material conflicts of interest Disclosure
    Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
    Country Specific Disclosures
    India – For private circulation only, not for sale.
    Legal Entities Disclosures
    Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone:011-43035555, Facsimile: 011-22795783 and Website:
    EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
    1. Reports
    a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
    (b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
    (c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
    2. Compensation
    (a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
    (b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
    (c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
    (d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
    (e) EWL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
    3 In respect of Public Appearances
    (a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
    (b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL