Tech Mahindra posts 7% YoY rise in consolidated net at Rs 959 crore

Tech Mahindra on Tuesday reported a 6.8 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 959 crore for the quarter ended June 30. It had posted profit of Rs 897.9 crore in the year-ago period. Sequentially, the numbers dropped 15 per cent. 

In constant currency terms, revenue grew 3.7 per cent, it said in its press release. 

Revenue for the quarter came in at Rs 8,653 crore, up 4.6 per cent YoY while EBITDA (Earnings before interest, tax, depreciation and amortisation) slipped 3.2 per cent YoY to Rs 1,314 crore. Operating margins came in at 15.2 per cent; down 120 basis points (bps) YoY.  On quarter-on-quarter (QoQ) basis, revenue of the company slipped 2.69 per cent. It had posted a revenue of Rs 8,892.3 crore in March quarter. 

“We are very encouraged to see TCV deal wins worth close to half a billion USD across Enterprise and Communcations. We remain optimistic on the demand environment, evident from a very strong pipeline and deal coversions. Digital will continue to be a primary growth driver underscoring our collaborative approach through TechMNxt platform," said CP Gurnani, Managing Director & Chief Executive Officer. 

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Basic earnings per share (EPS) stood at Rs 8.50 against Rs 9.27 in the corresponding quarter of the previous fiscal. 

Manoj Bhat, Chief Financial Officer, Tech Mahindra said, ”Business seasonality has affected revenue and margins this quarter. Our focus on automation and AI will help realize operational efficiencies as we look to accelerate growth through the year.”

In US dollar terms, revenue of the company stood at 1,247.1 million, up 1.9 per cent YoY. 

Most analysts had projected weak numbers for the company. For instance, Nirmal Bang Securities had estimated projected revenue to come in at Rs 8,874.4 crore, up 7.2 per cent YoY. Sequentially, the numbers were expected to drop 0.2 per cent. It had factored in 1 per cent QoQ CC (constant currency) revenue growth and around 40bps cross-currency headwind leading to a growth of 0.6 per cent in US dollar terms.

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It had forecast EBIT to come in at Rs 1,149.7 crore, up 6.8 per cent YoY (down 16 per cent QoQ).

"Tech Mahindra will disappoint with revenue decline of 85 bps and cross-currency headwind of 65 bps. Revenue growth has slowed down to a trickle on yoy comparison. We expect sequential EBIT margin decline of 250 bps contributed by 100 bps impact from wage revision, higher visa applications, Rupee appreciation and seasonal impact of lower Comviva revenues," Kotak Securities had said in a results preview note.