Tech Mahindra Q3 net up 7% at Rs 1,378 cr, revenue rises 19%

Narrowing of operating profit margin to 14.8% as against the year-ago period's 15.9% restricted the growth in the bottomline

IT services exporter Tech Mahindra on Tuesday reported 6.8 per cent rise in December quarter net profit at Rs 1,378.2 crore, with the growth in profits being compressed by supply side challenges.

Overall revenue from operations grew 18.7 per cent to Rs 11,450 crore but narrowing of operating profit margin to 14.8 per cent as against the year-ago period's 15.9 per cent restricted the growth in the bottomline.

Chief financial officer Milind Kulkarni said the margins were impacted because of supply side challenges which the company faced as it grew its topline, specifying that new hiring, salary increases and sub-contracting amid travel restrictions hurt the company.

Chief executive C P Gurnani told reporters that the company had earlier guided for the margin to be in the range of 15 per cent, and stressed that he does not see the issues on the human resources front lasting more than a few quarters.

The Mahindra group firm added over 3,800 employees to take its overall headcount to 1.45 lakh. Gurnani said the company will end FY22 with hiring 10,000 freshers, and targets to take the same to 15,000 in FY23.

With the attrition doubling to 24 per cent in December quarter from the year-ago's 12 per cent, and the company having identified employees in bigger centres like Pune and Hyderabad being the most prone to attrition, he said it has upped its hiring in smaller cities having sparser presence of competition like Kolkata, Vijaywada, Chandigarh and Coimbatore.

He explained that the staff wants to be present in places closer to their home and technology makes it possible now for having staff working from anywhere from a delivery perspective.

The company has also upped hiring in eastern Europe and central America's Costa Rica to serve the needs of digital clients to be served from the same or closer time zones.

The company reported deal wins of USD 704 million in the quarter as against USD 455 million in the year-ago period and USD 750 million in the preceding September quarter.

Gurnani said the company has also upped its focus on the Indian market, and also bifurcated the banking, financial services and insurance vertical to form a special vertical on insurance.

The company, which has had a history of acquisitions, had cash and equivalents of over USD 1.3 billion as of December 31, 2021.

Its scrip gained 1.87 per cent to close at Rs 1,507.05 on the BSE on Tuesday, as against the benchmark's 1.46 per cent surge on the Budget day.