Tech Mahindra profit down 4.5%, sees limited impact from H-1B visa fees

New deal wins for the second quarter stood at $816 million, up 35.3 per cent from last year

Don't want to miss the best from Business Standard?

Tech Mahindra’s net profit declined 4.5 per cent to ₹1,195 crore in the September quarter over a year earlier.

 

It was, however, slightly higher than ₹1,141 crore sequentially.

 

Revenue rose 5.1 per cent to ₹13,995 crore, helped by manufacturing, and banking, financial services, and insurance (BFSI).

 

Both the verticals, which contributed 18.1 per cent and 16.8 per cent, respectively, to the top line, were up 5.2 per cent and 6.2 per cent, respectively.

 

“The past year has been one of the low points for the industry and the discretionary spend is limited, with most projects being consolidation and cost take-out ones,” Chief Executive Officer Mohit Joshi said at a news conference on Tuesday.

 

While the telecommunications business, Tech Mahindra’s biggest, was down 2.2 per cent, the company continues to see a slowdown in auto.

 

It remains cautious on commercial vehicles while the passenger-car business shows some signs of stability.

 

Retail, however, continues to get tailwinds as ecommerce clients expand.

 

New deals in the second quarter were worth $816 million, up 35.3 per cent from last year.

 

When asked about the impact of the increase in H-1B visa fees, Joshi, who spent years in Infosys, said only 1 per cent of the company’s workforce held that visa and most who worked in the US were either local people or green-card holders.

 

“There will be some impact though I believe it will be limited. We will continue to do the work we do and strengthen our delivery centres in Brazil, Mexico, or our centres in Europe,” he added.

 

From a geography perspective, the Americas dropped about 2.7 per cent due to macroeconomic headwinds, only to be offset by Europe, which was up 5.5 per cent.

 

The operating margins climbed up to 12.1 per cent from 10.2 per cent a year ago, helped by operational efficiencies.

 

“This quarter marks the eighth consecutive period of margin expansion, driven by operational efficiency and disciplined execution,” Chief Financial Officer Rohit Anand said in a statement.

 

The information-technology headcount stood at 78,528 as of September 30, down 2,090 over the same comparable period. The attrition rate moved up to 12.8 per cent from 10.6 per cent.