By Sai Ishwarbharath B and Haripriya Suresh
BENGALURU (Reuters) -Tech Mahindra, India’s fifth-largest IT services company by revenue, reported marginally lower-than-expected first-quarter revenue on Wednesday, as sales in its Americas market recorded the steepest decline in nearly five years.
Consolidated sales rose 2.7% year-on-year to 133.51 billion rupees ($1.55 billion) in the June quarter, slightly below the average analyst estimate of 133.83 billion rupees, according to LSEG data.
“The market is still very, very volatile. We are seeing a continued slowdown in the auto and manufacturing portfolios,” said Mohit Joshi, CEO at Tech Mahindra.
“It’s a mixed picture, and I feel that it’s too early to say whether the tide has turned towards significant growth, or, god forbid, towards a recession,” he said in a post-earnings call.
Sagar Shetty, research analyst at StoxBox called Q1 numbers a “steady” performance due to improvement in terms of deal wins and operating margin.
“The company continued to exhibit resilience on the deal-win front, exceeding its typical quarterly guidance of $600–800 million, signaling sustained client confidence and healthy pipeline conversion,” he said.
Revenue from the Americas market, which accounts for nearly half of its overall revenue, fell 5.9% compared to last year.
This marks the sharpest decline since a 6.4% drop in the December quarter of FY21 during the COVID-19 pandemic.
“I would say the single biggest hit (for Americas) has been the slowdown from a manufacturing perspective,” Joshi added.
Uncertainty around U.S. tariffs have dampened IT firms’ hopes of a revival in client confidence and spending in their biggest market. A survey in May showed two in five tech executives had deferred discretionary projects.
Four of the company’s seven business verticals grew, led by a 3.8% increase in retail.
Tech Mahindra’s net new bookings rose to $809 million in the quarter from $798 million in the previous quarter and $534 million in the year-ago period.
Net profit rose 34% to 11.41 billion rupees, driven by improved operating margins, but missed estimates of 11.72 billion rupees, as per data compiled by LSEG.
Last week, bellwether Tata Consultancy Services also missed revenue estimates, citing delays in decision-making and project launches.
Peers Wipro and LTIMindtree report later this week.
($1 = 85.9340 Indian rupees)
(Reporting by Sai Ishwarbharath B and Haripriya Suresh; Editing by Janane Venkatraman and Tasim Zahid)
