Incoming MD and CEO designate Mohit Joshi, who will take over in December, said he remains optimistic about the company's prospects
Tech Mahindra shares ended nearly 4 percent lower on Thursday in Mumbai, after the IT services company posted fiscal first quarter numbers on July 26 that all missed analysts’ estimates. Shares were down as much as 5.4 percent earlier in the day on the Bombay Stock Exchange.
Long-timer MD and CEO CP Gurnani, who is handing over the reins to Mohit Joshi, a former Infosys senior executive, told analysts in a conference on July 26 that the three months ended June 30 constituted “one of the toughest quarters in recent times”.
Tech Mahindra, which has its origins as a joint venture between the Mahindra group and British Telecom, remains dependent on wireless providers and other customers in its communications, media and entertainment segment for more than a third of its revenues. These customers are among those who have cut back sharply on tech services spending in the ongoing global economic slowdown.
Here are five takeaways from Tech Mahindra’s earnings results and comments from Gurnani, who retires in December, and Joshi:
Gurnani said incoming CEO Joshi is going through “baptism by fire”, adding, “tough times don't last. Unprecedented times don't last”.
Sales actually rose a modest 1.4 percent in the Americas region from a year earlier but was down 50 basis points sequentially. Sales was also down 6.7 percent q-o-q in Europe.
In addition to the macroeconomic slowdown and reduced spending by clients, one important customer also declared bankruptcy, Gurnani said.
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Headcount, at about 148,300, is lower by 6.2 percent from a year ago. Attrition is down too, at 13 percent from 22 percent a year ago.
The company has invested in a strong “generative AI studio” developing solutions and use cases, he said. And its strength in the telecom sector will come through in the quarters to come, he says, with solutions in 5G, for example.
The company’s services lines have seen a lot of investment; they are cutting-edge and across the board are being infused with AI, he noted. “In the medium to long run, again, given what I've seen of the company, our clients, the ecosystem, I remain very optimistic about the opportunities in front of us,” he said.