Tech Mahindra Q3 profit slides as expenses jump on macro challenges

Tech Mahindra reported a fall in third-quarter profit on Monday, hurt by higher expenses and a subdued performance by its communications division.

The company's consolidated net profit fell 5.3 per cent to 12.97 billion rupees ($159.15 million) for the quarter-ending Dec. 31, from 13.69 billion rupees a year earlier.

"We are witnessing moderation in growth, given the tough macroeconomic environment," CP Gurnani, chief executive officer said.

Large Indian IT service providers have reported a mixed bag of earnings so far as the pandemic-driven boom is slowly being replaced by tighter client spending due to growing fears of a recession.

Market leader Tata Consultancy Services Ltd missed profit estimates and flagged challenges in Europe, while no. 2 Infosys Ltd beat profit estimates and raised its annual revenue outlook thanks to a strong deal pipeline.

Companies had also flagged softness in the telecom segment, a key contributor for Tech Mahindra.

Revenue contribution from the communication, media and entertainment segment shrank to 39.8% during the quarter from 40.9% a year earlier.

Total expenses jumped nearly 25 per cent to 122.02 billion rupees. However, the Pune-based company's total deal wins rose to $795 million in the third quarter from $704 million a year earlier, pushing its revenue from operations 20 per cent higher to 137.35 billion rupees.

Tech Mahindra shares closed up 0.6 per cent on Monday. The stock fell fell 43.2 per cent last year against the Nifty IT's 26 per cent fall.