Tech Mahindra’s Q3 profit slides 5.3% as expenses jump on macro challenges

India’s 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% 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% 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% higher to 137.35 billion rupees.

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

($1 = 81.4950 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Rashmi Aich and Janane Venkatraman)

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