Tech Mahindra Q2 net up 57% at Rs 718 cr y-o-y

However, on a sequential basis the profit was up only 4.7% as it had a forex loss of Rs 26 cr

India’s fifth largest IT services firm Tech Mahindra continued to deliver results in line with peers. The company reported a net profit of Rs 718.4 crore for the second quarter ended September 30, 2013 up 57.6% from Rs 575 crore in the corresponding quarter last financial year.

However, on a sequential basis (compared to trailing quarter) the firms net profit was up 4.7% as it had a foreign exchange loss of Rs 26 crore in the quarter. In April-June, the company has witnessed a foreign exchange gain worth Rs 133 crore.

The company’s revenue during the quarter stood at Rs 4,771 crore, up 35.5% on a year-on-year basis, as the merged entity was able to expand its business across geographies and vertical.

Since Tech Mahindra merged Satyam Computer Services with Itself in June this year, it said that “the Company has not obtained the audit opinion on the merged entity's consolidated financials for Q2FY13.”

“The winning trio for us this quarter – growth across verticals, regions and practices reflects the Tech Mahindra’s new found energy and alignment to win large deals, as well as participate with customers in their  transformation journey. Our judicious investments in building Connected Solutions and relentless focus on enhancing customer experience is showing results,” said C P Gurnani, Managing Director & CEO, Tech Mahindra.

The company’s dollar revenue stood at $758 million, up 4.7% on quarter-on-quarter basis, while operating profit was at $176 million, up 15.5%.

“There was a five% growth in volumes in the quarter ended September while pricing remained largely steady (throughout the quarter),” said Chief Financial Officer Milind Kulkarni.

The company also echoed similar sentiment on Europe, and stated that the region has started looking better and the greenshoots are apparent in the region. The US has also improved and greater potential is seen in Australia and Africa, said the management.

In India, however, the company said it had a slight tough time with a government project but remained largely steady otherwise and was nothing spectacular.

Tech Mahindra’s total active client count stood at 576 in the quarter ended September as against 567 in the previous quarter.

Though the company’s utilisation stood at 75% in the period under review, a cyclically weak quarter due to Christmas may keep the performance slightly muted in Oct-Dec.

In order to protect itself from rupee volatility in coming months, the company has hedged $900 million and 245 million pounds, said the Chief Financial Officer. Regarding the employee wage hike, the management said the wage hike will kick in sometime in January 2014 and could impact margins. The company though will try to limit the impact by pushing up utilisations.

Tech Mahindra's total headcount for the year stood at 85,234 with software professionals at 55,432 and BPO at 23,225. Sales and support headcount was at 6,577.

Regarding British Telecom which is around 12% of Tech Mahindra 's revenue that has been declining, the management said the company will continue to be the largest supplier to the entity though BT volumes continued to fall for another quarter.