Update at 2.05 PM: Markets rebound, Sensex up 129 points at 31,157 while the NSE Nifty trades 20 points higher at 9,615. Top Sensex gainers are ITC, HDFC and Hindustan Unilever. Top losers are Sun Pharma (down 10.5 percent) and Adani Ports (down 5.1 percent). ITC was trading at Rs 318, HDFC at Rs 1,594 and Hindustan Unilever at Rs 1,068.
Original story:
Tech Mahindra investors had a bad day on Monday when the share price plunged 16.78 percent to Rs 357 in early trade, the biggest fall in nine years, before recovering to Rs 382, down 11 percent.
The fall was due to the company (formerly Satyam Computers) reporting disappointing Q4 results last Friday. Consolidated net profit fell 33 percent to Rs 590 crore from Rs 876 crore in the corresponding period last year, though revenues grew 9.9 percent to Rs 7,733 crore, YoY.
Read: Tech Mahindra Q4 net profit plunges 33%
The fall had an impact on other IT stocks such as TCS, Infosys and Wipro that were trading with losses in the range of 0.50 to 1.50 percent while the BSE Sensex was up 72 points at 31,100.
Brokers have a mixed view on Tech Mahindra
Angel Broking said the revenue mix for Q4 was a tad disappointing. "In terms of geography, the USA was main dampener; it constituted 45.1% of sales V/s 46.7% of sales in 3QFY2016, while ROW (rest of the world) was the key driver constituting 25.3% of sales V/s 23.9% of sales in 3QFY2016," Sarabjit Kour Nangra, VP Research- IT, said in her note.
IDBI Capital Markets & Securities referred to the company's deal wins while pointing to a fall in profit margins. "TECHM secured deals with TCV (total contract value) of ~$320 million taking the TCV to ~S$1.3 billion for FY17. Revenue from top 5/10/20clients saw a QoQ decline. The growth in Q4FY17 was driven by non-top 20 clients, which grew by 4.4% QoQ following a 6.7%/5.9% QoQ growth in Q3/Q2. The number of $20mn+ clients declined by 2 QoQ to 36 vs. 40 in Q4FY16.
"Q4 EBIT margin declines to all-time low of 8.2%, -420bps QoQ," the brokerage said in its note, downgrading the target price to Rs 456 from Rs 510 earlier.
Hindustan Unilever Limited (HUL), ITC, Power Grid Corporation and Maruti Suzuki hit new 52-week highs in early trade.
