Shares of Tech Mahindra were slumping on Thursday after the IT major reported a steep decline in earnings.

What Happened: The firm reported a 61% decrease in its consolidated net profit of ₹505.3 crore for the quarter ended September. Reduced spending by clients was a significant factor in this decline from the ₹1,299.2 crore in net profit it made last year.

During the quarter, the company’s consolidated revenue from operations also dipped by 2% to reach ₹12,864 crore, down from ₹13,129.5 crore in the same period in 2022.

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In an earnings call, Tech Mahindra CEO and Managing Director CP Gurnani said the past few quarters had been some of the most challenging in his long career. He mentioned that market demand for 5G was not strong enough yet and that some customers had to cut capital expenditure due to high operating costs and rising interest rates.

The company’s performance in various business verticals also saw declines. The communications, media, and entertainment sector had the steepest fall of 11.5%, followed by a 6.3% dip in the banking, financial services, and insurance segment and a 4.6% decrease in the retail, transport and logistics vertical.

Tech Mahindra’s European business shrank by 8.6%, the American business by 0.5% and the rest of the world segment by 11%.

The firm said it was exploring the possibility of exiting some of its businesses as part of efforts to improve operational efficiency.

Price Action: Tech Mahindra’s share price was down 2.6% at ₹1,112.40 at the start of trade on Thursday.

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