Tech Mahindra's revenues from British Telecom is expected to slide following its merger with Mahindra Satyam.

While revenues from non BT accounts are on the rise, according to analysts, Tech Mahindra would get less than 50 per cent of its current revenue from BT going ahead. According to a report from Angel Broking, currently Tech Mahindra gets 35 per cent of its revenues from BT, which after the merged entity would go down to 17 per cent.

Also, BT, since the second quarter of FY-12, has called for retendering its projects, which, it used to outsource to companies such as Tech Mahindra. Currently, BT holds a 12.8 per cent stake in Tech Mahindra, which has come down from 23.18 per cent before the merger, according to data from the company and brokerage house Prabhudas Lilladhar.

This reduced stake will not affect business and analysts feel that less reliance on BT is good for the company. “Non-BT accounts in the second quarter again continued as the primary growth driver for the company and grew by 7.3 per cent over the previous quarter with revenue of $186.6million,” said an analyst.

We expect the non-BT business to grow at a Compounded Quarterly Growth Rate (CQGR) of 3.1 per cent and in the last couple of quarters of FY 12 and 2.8 per cent in FY2013, according to Angel Broking estimates. However, if Tech Mahindra holds on to existing revenues or see an increase from BT, it would be good news.

“If revenues from BT come at a higher margin compared to its current margin, then it would be good for Tech Mahindra,” said the analyst. Tech Mahindra's EBITDA in FY-12 is estimated at 16.6 per cent, which has seen an erosion of 63 per cent from FY 2009.

> venkatesh.ganesh@thehindu.co.in

Related Topics
comment COMMENT NOW