Tech Mahindra (TechM) has posted a subdued performance in 1QFY18 with its USD revenue rising by just 0.6% QoQ (-0.6% QoQ in CC terms) to US$1,138mn, below our estimates by 3.2%. The key Communications vertical continued to remain under pressure with revenue declining by 1.8% QoQ in USD terms. The vertical contributed 45.2% to total revenue in 1QFY18, the lowest in 19 quarters since 2QFY13. However, the Enterprise business grew at a much better pace of 2.7% QoQ, led by BFSI and Retail verticals. Notably, in line with our estimate, TechM's EBIT margin rose by 75bps QoQ owing to lower SG&A; and other cost. The management believes that TechM has achieved stability in business portfolio and expects positive outcomes to be...