Tech Mahindra (TECHM)
Why the stock moved
Successful turnaround strategy showing results with 5G and network services revenue growing 25% QoQ.
In-depth analysis
Tech Mahindra's focused strategy on 5G, network services, and enterprise solutions is yielding positive results. The company has successfully stabilized its communications vertical which contributes 42% of revenue. New CEO's restructuring initiatives including cost optimization and portfolio realignment are showing tangible benefits.
Key highlights
- 5G Revenue: Grew 25% QoQ, now $400 million annual run rate
- Cost Optimization: Reduced operational costs by 8% through automation
- Partnership: Strategic alliance with AT&T for network modernization
- Margin Improvement: EBIT margin up 120 bps to 11.2%
- Digital Transformation: Non-telecom revenue now 58% of total
Outlook
Management targets 10% revenue growth for FY25 with margin expansion to 12-13%. Focus on reducing dependence on communications vertical by growing enterprise and manufacturing segments. Investment in AI and automation to drive productivity.
Risk factors
High dependence on telecom sector which faces cyclical challenges. Integration risks from past acquisitions. Slower-than-expected recovery in enterprise IT spending could impact growth targets.