Explained: Why Tech Mahindra shares surged 10% despite Q4 profit decline - Business News, Finance News, Share Market News - Market trendz

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Tuesday 30 April 2024

Explained: Why Tech Mahindra shares surged 10% despite Q4 profit decline

Tech Mahindra shares witnessed their biggest intraday gain in nearly 8 years on Friday after the company reported its Q4 results.

The company's shares surged despite a 41% year-on-year (YoY) decline in net profit to Rs 661 crore. Additionally, the revenue from operations during the quarter also fell 6.2% YoY to Rs 12,871.30 crore.

This is because Tech Mahindra’s CEO and MD Mohit Joshi unveiled a three-year turnaround plan to tackle slow business growth. The aim is to deliver better revenue growth compared with peers and optimize margin improvement by FY27.


It may be noted that Tech Mahindra shares have been down marginally since the beginning of the year and up over 3% in a month.

Tech Mahindra's turnaround plan

Joshi outlined a phased approach to the turnaround, aligning with the fiscal year.

In FY25, Tech Mahindra will enter a 'turnaround phase', prioritising the establishment of the new organisation. He said there will be added focus on investment in key accounts, markets, and service lines. Integration of front-end portfolio companies and a turbocharged program for key account growth will also be focal points. Additionally, the initiation of Project Fortius will aim at cost optimization during this stage.

Joshi also shared his 'Vision 2027', highlighting priorities such as organizational restructuring, phased business enhancements, and strategic investments.

Moreover, leveraging synergies with other Mahindra Group businesses will be emphasized. Additionally, the company launched Project Fortius, a three-year program aimed at enhancing margins through the implementation of various strategies by management.

In FY26, Tech Mahindra will enter the 'Stabilisation Phase', maintaining its investment momentum while advancing Project Fortius to realize cost efficiencies.

By FY27, the company anticipates entering the 'Reaping Returns' phase, benefiting from enhanced long-term structural alignment and ongoing pyramid improvement.

Furthermore, Tech Mahindra will intensify efforts in developing its telco, manufacturing, BFSI, and AI verticals.

By FY27, the company aims to achieve an EBIT margin expansion to 15% and surpass peer average topline growth among the top six and seven IT services players.

At 10.44 am, shares of the company were trading 9.15% higher at Rs 1,299 on the Bombay Stock Exchange (BSE).

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