Software services firm Tech Mahindra Ltd’s shares fell as much as 5.8 per cent to Rs 662.35 in the biggest percentage loss since May 29, 2017.

The company’s Q4 net profit more than doubled to Rs 1,222 crore ($181.3 million), beating analysts’ average estimate of Rs 934 crore, according to Thomson Reuters data

The communications segment contributed 41.6 per cent to total revenue in the quarter, compared with 46.3 per cent a year ago. According to Nomura analysts, telecom sluggishness has kept them “cautious on growth”.

CLSA analysts said further margin expansion depended either on a growth recovery in telecom or a rise in offshore leverage and that looked unlikely. It has raised the price target to Rs 600 from Rs 540, and ‘sell’ rating.

The company’s sharp cuts to headcount have “shrunk its bench and reduced its ability to react to improving demand conditions, and we expect it to lag the growth recovery in FY19-20,” CLSA analysts said.

Macquarie said outlook for telecom business remains muted, as it expected 5G spend to be at least a year away.

Nearly 5.6 million shares change hands by about 10.50 am, vs 30-day average trading volume of 3.1 million.

Twenty four of 40 brokerages rate the stock “buy” or higher, eight “hold” and rest “sell” or lower and their median price target is Rs 675.

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