Shares of Tech Mahindra dropped over 1.4 percent on Tuesday, a day after the company posted a 16.4 percent year-on-year (YoY) decline in net profit for the April-June quarter. Some brokerages are still upbeat as they say deal wins have set the stage for strong growth in FY23.

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At 9:00 am the shares of the information technology (IT) company were trading at Rs 1,014 on the BSE.

Here is a snapshot of the firm's June quarter earnings:

Also read: Tech Mahindra June-quarter profit declines 16.4%

In the year so far, the Tech Mahindra shares have fallen over 40 percent. But despite this and the earnings drop some brokerage firms are upbeat about the stock.

Global brokerage firm JPMorgan has an overweight call on the stock but has slashed the target price from Rs 1,200 to Rs 1,100 per share. It said the company posted decent growth, but margin disappoints.

Though disappointed by Tech Mahindra's margin, Nomura said deal wins set the stage for strong growth in FY23 and margin is also likely to improve in FY23.

Jefferies said Tech Mahindra revenue growth in the June quarter was slightly ahead of estimates. The brokerage house said the IT company's commentary of 14 percent margin in FY23 and 14 percent plus margin in FY24 seems optimistic.

Company banking on new technologies

After the results, CP Gurnani, managing director and chief executive, said the company was starting this financial year with a "renewed commitment" toward delivering consistent organic growth.

"We remain resilient and watchful given the dynamic global macro-economic environment and will continue to invest in new and emerging technologies to deliver differentiated offerings. Our winning strategy rests on the pillars — ‘Purpose, People and Performance’ which is aiding us to responsibly capitalise on the strong demand environment in the market,” he said.

Rohit Anand, Chief Financial Officer, Tech Mahindra, also said delivery transformation, cost optimisation, and cash conversion would be the key focus areas. "We aim to expand our profitability through operational excellence and improved operating metrics for FY23,” he said.

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First Published:Jul 26, 2022 10:09 AM IST