Q4 results today: Why TechM, LTTS shares fell up to 6%; key earnings expectations

Tech Mahindra Ltd (TechM) and L&T Technology Services Ltd (LTTS) saw their shares tumbling up to 6 per cent in Wednesday's trade, ahead of their quarterly results, later in the day, as peer HCL Technologies reported a weak set of March quarter results and guided for a soft FY27 revenue growth, dragging the whole IT basket. TechM fell 5.61 per cent to Rs 1,416.10 on BSE. LTTS shares declined 2.9 per cent to Rs 3,537.10.

Why the two stocks fell?

The two stocks fell amid a broader selloff in IT stocks, following HCL Tech's Q4 results. The BSE IT index was down 4.33 per cent at 29,306.33 at the time of writing this report, as the Noida-based firm gave a tepid FY27 guidance, with its Q4 revenue fell 3.3 per cent quarter-on-quarter (QoQ) to $3,682 million, missing consensus expectations. Its net new deal wins at $1.9 billion declined 35 per cent year-on-year (YoY), while Ebit margin at 16.5 per cent also came in below the consensus estimate of 17.6 per cent. 

 Q4 results preview

Equirus Securities expects TechM to report 28.4 per cent YoY rise in recurring profit at Rs 1,498 crore on 12.7 per cent YoY jump in sales at Rs 15,087 crore. It sees TechM to report 0.6 per cent growth in constant currency revenue sequentially, largely led by ramp up of earlier won deals and seasonal strength in Comviva. There may be absence of certain seasonal revenues of Q3 in the Manufacturing segment. EBIT margins are expected to improve 66bps QoQ largely led by cost optimisation efforts, Equirus said.

The same brokearge expects LLTS o report 8.8 per cent YoY rise in net profit at Rs 338.50 crore on a flat sales growth at Rs 2,986 crore. Dollar revenue is seen falling 1 per cent QoQ and 0.5 per cent CC, led by ongoing restructuring of the business to improve profitability. EBIT margins is expected to improve 21 bps QoQ, largely led by forex benefits and improving business mix to be partly compensated by wage hikes.

Nomura India expects TechM Q4 profit at Rs 1,749 crore, up 49.9 per cent YoY. Sales are seen rising 10.5 per cent YoY to Rs 14,789 crore. Margin is seen at 13.5 per cent, up 300 bps. Nomura expects revenues to be flat QoQ in cc terms led by both communications and enterprise verticals. It sees net new deal wins at $1 billion. This brokerage sees profit for LTTS rising 18.7 per cent YoY to Rs 369.30 crore on flat sales at Rs 2,994 crore. "We expect revenue to be flat q-q in cc terms as client pruning and restructuring exercise continues. We expect EBIT margin to rise 20bp QoQ as client support has ended in Q2," it said.

What to watch? For TechM, all eyes would be on commentary on demand and banking and telecom verticals, large deal wins and progress on margin improvement, impact of AI and ongoing Middle East war on business and revenue growth trajectory targets for FY27.

For LTTS, commentary on demand, large deal wins, margin improvement trajectory, impact of AI and West Asia war on business, update on SWC divestment and outlook on client discretionary spend will be keenly watched.