Tech Mahindra Q1 net profit rises 12.4% to Rs 8.98 billion, revenue up 13%

India’s fifth-largest IT services company Tech Mahindra’s first quarter earnings met Street estimates, though tepid performance of its telecommunications vertical was a drag on its profitability.

The Pune-headquartered firm posted 12.4 per cent rise in its net profit at Rs 8.98 billion in the first quarter ended June, when compared with the corresponding period previous fiscal year. On sequential quarter basis, the profits, however, saw a sharp decline of 26.5 per cent.

The company said that decline in net profit sequentially was due to a large gain from a land deal in the previous quarter. Also, seasonality within the Com-viva business dragged margin 110 basis points. 

Revenues of the company in Q1 of FY19 stood at Rs 82.7 billion, a rise of 12.8 per cent YoY and 2.8 per cent on quarter on quarter basis. In constant current terms, the revenue growth was 0.3 per cent. 

"The overall business growth trajectory for the FY19 is on track. While business seasonality has affected the current quarter, our 'run, change, grow' strategy with strong focus on digital transformation is keeping the business buoyant. The changing demand landscape for next generation technologies is going to fuel the digital business further," said CP Gurnani, CEO and MD of Tech Mahindra.