BENGALURU, Jan 24 Reuters India39;s Tech Mahindra posted a 60.6 drop in thirdquarter net profit on Wednesday, missing estimates as clients continued to hold back spending in communications and banking verticals. The fifthlargest Indian IT services company39;s net profit fell to 5.10 billion rupees 61.36 million for the three months ended Dec. 31, 2023, from 12.97 billion rupees a year earlier.

Analysts, on average, expected a profit of 6.17 billion rupees, according to LSEG data.

In the first quarter after Mohit Joshi took over as the new chief executive officer, the company reported a revenue of 131.01 billion rupees, compared with analysts39; estimates of 128 billion rupees.

Operating margins fell 660 bps to 5.4 from the same period last year, while new deal wins more than halved to 381 million from 795 million.

The Puneheadquartered company has been lagging peers in terms of growth with profit hitting a 16year low in the last quarter, while operating margin was at a historic low of 4.7.

India39;s 245billion IT industry has been hurting due to an uncertain demand environment as clients cut back on discretionary spending amid inflationary pressures and recession fears.

Tech Mahindra39;s growth was hit due to a weakness in the communications, media and entertainment vertical, its largest in terms of revenue. It fell 13.4 on year.

The company has been trying to exit noncore, lowmargin businesses to improve profitability for the past few quarters.

Joshi said the…