BENGALURU (Reuters) – India’s Tech Mahindra reported its smallest revenue fall in four quarters on Thursday, helped by its manufacturing and healthcare segments, as the company signalled the return of client spending in its key U.S. market.
Consolidated revenue in the first quarter fell 1.2% to 130.05 billion rupees ($1.55 billion), beating analysts’ average estimates of 129.45 billion rupees, as per LSEG data.
Analysts look at revenue numbers as that helps them gauge the demand for IT services.
“With this positive start, we are more confident this will be a better year compared to the previous one,” said CEO Mohit Joshi, signalling better spending from U.S.-based clients and a marginal improvement in overall demand.
The company’s net new deal bookings rose to $534 million, from $500 million in the previous quarter and $359 million in the year-ago period.
India’s $254 billion-worth IT sector has been coping with sluggish demand in recent years, with clients cutting spending on non-essential projects due to economic uncertainty and higher interest rates.
Revenue for Tech Mahindra, India’s fifth-largest IT services firm by revenue, began falling in the last three quarters, widening from a 2% fall in the September 2023 quarter to 6.17% in March 2024.
Operating margin rose 170 basis points year-on-year to 8.5% in the June quarter on lower sales and administrative costs. This helped the Pune-based company record a 23% rise in profit.
Larger rivals Tata Consultancy Services, Infosys and HCLTech also indicated a recovery in North America in the coming quarters after reporting upbeat first-quarter results, noting that “the worst might be over for the sector”.
Tech Mahindra shares closed 0.2% higher ahead of the results, while Nifty IT index closed 0.15% lower.
($1 = 83.7090 Indian rupees)
(Reporting by Sai Ishwarbharath B; Editing by Janane Venkatraman)
