TechM posts biggest drop in 5 months on growth concerns

Shares of Tech Mahindra on Thursday posted biggest drop in five months despite posting a better-than-expected rise in net profit on growth concerns.

The stock fell as much as 5.7 per cent in its biggest intraday percengage drop since May 29.

At 11.40 a.m., the shares were trading lower by 4.13 per cent at Rs 468.80 on the BSE. On the NSE, the stock plunged 4.04 per cent to Rs 468.75. In terms of equity volume, 3.09 lakh shares were traded on the BSE.

Tech Mahindra’s second quarter consolidated net profit grew 29.7 per cent year-on-year to ₹836 crore from ₹644.73 crore in the July-September quarter last year, backed by improvement in operational performance.

The company’s revenue from operations was up 6.1 per cent at ₹7,606.38 crore during the quarter compared with ₹ 7,167.41 crore in the same period last year.

Still, Nomura analysts were concerned with the underperformance of telecom, media & entertainment sectors and the stock's gains over the past three months.

CLSA has maintained “sell” on Tech Mahindra, citing “uncertain long-term growth prospects” and “exhaustion of margin momentum".

25 of 44 brokerages have rated the stock as “buy” or higher, 12 "hold” and seven “sell” or lower; their median target price is Rs 460. The stock had risen 18 per cent in July-Sept quarter compared with 0.6 per cent rise in the Nifty IT index.

(With inputs from Reuters)