Tech Mahindra Experiences Largest Profit Drop in Over 16 Years as Shares Slide

Falling profits linked to increased expenses and reduced client spending in competitive IT sector, with expected recovery in the next financial year.

Tech Mahindra, an Indian IT services company, reported a significant 61.6% decrease in net profit in the September quarter. This was the company's largest fall in profit since March 2007, causing shares to drop by as much as 3.7%.
The decrease in profit was due to a combination of increased costs, with expenses rising by nearly 7%, and reduced client spending. The biggest jump in expenses was a 30% increase in 'other expenses'.
The IT industry in India has been facing uncertainty due to delays in deal-making, with businesses in the US and Europe cutting back on investments due to fears of an economic downturn.
Tech Mahindra's revenue from operations also fell slightly by 2.02% on a year-on-year basis, while new deal wins decreased from $716 million to $640 million.
Analysts predict a tough demand environment in the near term, especially in the telecom sector. However, they expect a recovery in revenue growth in the next financial year. The company is currently restructuring to reduce overheads.