Tech Mahindra Q2 net down 17.5%

Tech Mahindra posted net profit at Rs 643.4 crore for the second quarter

Tech Mahindra, the country's fifth largest information technology services entity, reported a mixed bag for the September quarter. Net profit was pulled down by a one-time restructuring cost and margins were impacted by high tax outlays. However, revenue jumped on robust growth in the communications and manufacturing businesses. 

Net profit was Rs 644.7 crore, down 16.9 per cent from the Rs 776 crore a year before. From the earlier quarter, it was down 14 per cent, due to a one-time restructuring cost of Rs 85 crore.  

Revenue for the quarter grew 8.3 per cent to Rs 7,167 crore; sequentially, it was up 3.5 per cent. Bloomberg had estimated the revenue would grow 2.3 per cent and net profit to decline 6.4 per cent. 

“The performance indicates our early investments in new technologies and capabilities are starting to show results,” said Vineet Nayyar, vice-chairman.

Operating earnings were Rs 1,070 crore, compared to Rs 1,029 crore for the June quarter. The margin expanded to 14.93 per cent, from 14.87 per cent. 

In dollar terms, growth was five per cent on a constant currency basis, best among peers for the quarter. Tata Consultancy Services, Infosys, Wipro and HCL reported growth of one per cent, 3.9 per cent, 0.9 per cent and 2.8 per cent, respectively.  

“Overall, it was a very good quarter for us, with the growth well supported by our key communications and enterprises businesses. We had some marquee wins,” said C P Gurnani, managing director. 

Manoj Bhatt, deputy head of finance said: "Our communications business grew 3.7-3.8 per cent, manufacturing grew by 11 per cent and BFSI (banking, financial services and insurance) was up six per cent on a constant currency basis,” he said.