Tech Mahindra & Satyam Merged (ADD) - Quarterly estimates - ICICISecurities

- Muted revenue growth - Overall revenues are expected to grow 1.3% QoQ with TechM revenues flat QoQ and Satyam's revenues up 2.5% QoQ (including US$7mn contribution from Complex IT integrated for two months).

- EBITDA margin is expected to improve 60bps QoQ with the help of currency i.e. 4% QoQ rupee depreciation against US$. Visa costs will be the key headwind during Q1FY14 for Satyam and a decline in Comviva revenues and margins is key headwind on the TechM side.

- Aggregate forex gain is expected to be US$8-10mn primarily due to translation gains while in Q4FY13 both TechM and Satyam combined incurred a forex loss of US$10mn.

- Recurring PAT is expected to be up 27% QoQ due to revenue growth, margin expansion and substantial forex gains in Q1FY14.

- Key factors to watch: i) Outlook for the telecom industry, ii) outlook on business from BT, iii) recruitment plans and iv) margin outlook and capex plan.

Source : Equity Bulls

Keywords