Tech Mahindra net down 8% to Rs 631 crore as margins slump

IT services firm Tech Mahindra today reported an 8.1 per cent decline in quarterly net profit at Rs 630.7 crore as margins slumped due to a slew of factors.
The margin narrowed to 18.1 per cent in the quarter ended June from 21.3 per cent in the previous (March) quarter on account of multiple factors, which included cyclical ones as well as some one-offs, Tech Mahindra Executive Vice-Chairman Vineet Nayyar said here.
The margin was impacted by 0.50 per cent by the rupee appreciation against the US dollar and a hike in visa fee shaved off another 1 percentage point.

British Telecom's ammortisation took away 0.30 per cent of the margin and another 0.50 per cent because of lower utilisation. Around 0.65 per cent was shaved off due to transition of a large project, Chief Financial Officer Milind Kulkarni explained.
Nayyar said there might be some more impact in store as the cost of project transition is expected to "cascade" into the next quarter. "The first quarter is an aberration rather than a trend," he said, seeking to pacify concerns.
He said the company has upfronted some hiring to build up for the future, which has resulted in the utilisation rate dropping to 72 per cent from 76 per cent a year ago.

The Mahindra Group's IT arm hired 3,288 people in the April-June period to take the total headcount to over 92,000. Of this, those engaged in software business stood at 64,095, while 21,936 were employed in the BPO unit.

There was also an increase in attrition rate to 16 per cent from 15 per cent in the previous quarter.
For the reporting quarter, revenue increased 24.81 per cent to Rs 5,121.5 crore, while operating profit inched up to Rs 928.4 crore from Rs 864.5 crore a year ago. Pre-tax profit went down to Rs 864.3 crore from Rs 932.1 crore a year ago.

Nayyar said among the geographies, the Americas and Europe performed impressively, while among the sectors, its mainstays telecom and enterprise continued showing traction.
During the quarter, the company repaid Rs 277 crore in debt, which now stood at Rs 86 crore, while cash and equivalents are at Rs 3,670 crore as on June 30.
Even though the second largest IT player Infosys has hinted at some pressures on the pricing front, Tech Mahindra Managing Director and Chief Executive C P Gurnani said the condition continues to be stable.
The company scrip lost 0.33 per cent to Rs 2,150.30 on BSE, whose 30-share benchamrk fell 0.74 per cent.