Tech Mahindra Q1 net profit up 12.4%; bets big on 5G services

IT services firm Tech Mahindra today reported a 12.4 per cent rise in consolidated net profit at Rs 897.9 crore for the June quarter, and said it is betting big on preparedness for 5G services roll out.

The firm had registered a net profit of Rs 798.6 crore in the year-ago period, it said in a statement.

Its consolidated revenue stood at Rs 8,276.3 crore in the reporting quarter, up 12.8 per cent from Rs 7,336.1 crore in the year-ago period.

The company's net profit, however, declined 26.5 per cent compared with the March quarter, while the revenue was up 2.8 per cent.

"The overall business growth trajectory for FY19 is on track. While business seasonality has affected the current quarter, our 'Run Change Grow' strategy with strong focus on digital transformation is keeping the business buoyant," Tech Mahindra managing director and chief executive officer CP Gurnani told reporters here.

He said the company is looking at creating new business opportunity and the changing demand landscape for next generation technologies is going to fuel the digital business further.

"Our digital transformation vertical, estimated at 15-18 per cent, will grow to 40 per cent in two year's period," he said.

Gurnani said the company is well positioned to be a big players in 5G space, which will not only increase bandwidth, but redefine the way communication network operates and system integrators have huge role to play.

Tech Mahindra has already set up a lab in Bengaluru in association US chipmaker Intel as part of its preparedness for 5G services.

Media reports today said that Tech Mahindra and AION Capital, a joint venture between global buyout investor Apollo and ICCI Venture, are leading the fray to acquire Interglobe Technologies, the IT and back office arm of travel conglomerate Inter-Globe Enterprises.

Gurnani, however, refused to comment on the deal, saying M&A is part of the firm's growth strategy.

Commenting on the company's future growth plans, chief financial officer Manoj Bhat said, "We will continue to focus on our journey of margin improvement in FY19. While the global macros, including currency, continue to be volatile, we are working with a multipronged approach of enhancing operational efficiencies, embracing new-age delivery, reskilling and increasing value per employee."