Tech Mahindra shares fell 5.5% as the Indian giant reported lower-than-expected margins in the June quarter. Q1 ebitda margin fell 300 basis points sequentially to 18.1% from 21.2% in the previous quarter. It had been growing fast in terms of staff, and utilisation seems to have fallen. It has also been losing some expected business in Europe where the percentage of the total has dropped to 31% from a high of 35%.
CP Gurnani, MD & CEO, Tech Mahindra said: "Our robust performance during the quarter sets the tone for rest of the year. Our customers have shown a remarkable appetite for the "connectedness revolution" and are readying themselves for the disruptions in future. Tech Mahindra with telecom as a horizontal differentiator augurs well with the customers in this potentially disruptive landscape."
Rising visa costs (100 bps), rupee appreciation (50 bps) and lower utilisation (50 bps) were among the factors that hit Tech Mahindra's margins in the quarter, analysts said.