Tech Mahindra rides high on rebound in communications spend

Bengaluru, 31 July IT services major Tech Mahindrais confident of posting double digit growth in its revenues in the current financial year on the back of uptick in communications, media,&entertainment vertical.

Communications, media & entertainment vertical is one of the important verticals of Tech Mahindra with a revenue share of 40 per cent in its top line. In the first quarter ended June, this vertical posted 12.6 per cent growth year-on-year basis, while the growth stood at 3.2 per cent in sequential basis.

The IT firm's orderbook in the first quarter jumped to $815 million from $290 million in the last fiscal. Among the large deals, the IT firm won a large outsourcing contract with a leading UK telecom company for both consumer and enterprise businesses.

"We continue to see strong traction in large deal wins as we are helping our customers in integrated digital transformation. Our focus on key technology pillars wrapped around experience-led approach with TechMNxt.Now will help us to capitalise on the strong demand momentum," said CP Gurnani, MD& CEO of Tech Mahindra.

Analysts are of the opinion that rising spend in communications vertical bodes well for the company. Especially, rolling out of 5G network across many geographies will drive its future growth.

"The company reported healthy revenue growth in line with large cap peers. It has also shown healthy traction in order book. This coupled with traction in digital technologies, improving 5G spend (on communication & enterprise side), large deals and acceleration in Europe bode well for the company's revenue growth," ICICI Securities said in a note.

Tech Mahindra's share price rose 7 per cent to end at Rs 1,207.70 at National Stock Exchange on Friday.