Tech Mahindra declines post Q3 results

Tech Mahindra reported decent Q3 numbers at fag end of market hours yesterday, 31 January 2020.

On a consolidated basis, Tech Mahindra's net profit inched 2% higher to Rs 1,146 crore in Q3 December 2019 as against Rs 1,124 crore reported in Q2 September 2019. Revenue from operations rose 6.45% to Rs 9,654.60 crore in Q3 December 2019 over Q2 September 2019.

Profit before Tax rose 10.16% to Rs 1,473.60 crore in Q3 2019 as compared to Rs 1,337.70 crore posted in Q2 2019. IT major reported a robust revenue growth at 4.3% in constant currency terms.

Consolidated Earnings before interest, tax, depreciation and amortization (EBITDA) stood at Rs 1,563 crore in Q3 December 2019, rising 4.2% on quarter on quarter (Q-o-Q) basis. EBITDA margin declined to 16.4% in Q3 2019 as against 18.8% reported in Q2 2019.

The company's annualized consolidated attrition rate stood at 19% as on 31 December 2019 as against 20% as on 30 September 2019 and 21% on 31 December 2018.

Commenting on company's Q3 performance, CP Gurnani, Managing Director & Chief Executive Officer, Tech Mahindra, said, This is a quarter of strong growth across our Communications and Enterprise businesses. We continue to win marquee deals and are well poised to capitalize on new market opportunities with technology shifts like 56, which continues to be a key focus area in the year ahead.

In Q3 2019, Tech Mahindra has signed a multiyear Managed Services deal with a global financial services leader in insurance and Annuities. The engagement includes Managing Applications, Cloud and IT Infrastructure across multiple geographies, while improving efficiencies through Automation and Artificial Intelligence-based operations.

Tech Mahindra announced the acquisition of a 70% stake in Bangalore headquartered Cerium Systems. Cerium will boost the company's Engineering Services practice in VLSI (Very Large Scale Integration) and Embedded Software. 70% of the shares will be acquired upfront for an enterprise value not exceeding Rs 245 crore. The remaining 30% will be acquired over the next two years at a valuation linked to the financial performance of the company.

Shares of Tech Mahindra slipped 1.33% at Rs 784.80. The stock traded in the range of Rs 766.95 to Rs 799.60 so far.

Tech Mahindra operates in digital transformation, consulting and business re-engineering solutions and is a part of the Mahindra Group.

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