Tech Mahindra Q4 net profit down 27% YoY as clients cut spending

Attrition for quarter reduces to 15% from 24% last year, says company

Tech Mahindra’s Q4 FY23 net profit fell 27 per cent at Rs 1,125 crore, from Rs 1,545.3 crore in the same quarter last financial year. Net profit was down sequentially by 12.45 per cent.

Revenue for the Q4 FY23 grew 13.2 per cent at Rs 13,718 crore; sequentially it was down 0.1 per cent.

Full-year revenue touched Rs 53,290 crore, up 19.4 per cent. Full-year net profit was down 13.2 per cent at Rs 4,832 crore.

The impact of clients slowing down discretionary spends was clear on the IT services company’s performance.

“As we step into FY'24, we see the increasing need for businesses to stay agile by leveraging next generation technologies. We are strongly focused on helping our customers stay competitively dominant and relevant in the era of fast evolving market conditions by helping them adapt to leaner and sustainable business Models,” said C P Gurnani, CEO & MD of Tech Mahindra.

The company also saw its net addition negative for the quarter by 4,668. Attrition for the quarter came down to 15 per cent from the high of 24 per cent last year.

EBITDA at Rs 2,021 crore was down 5.7 per cent quarter-on-quarter, and down 3.2 per cent year-on-year. Despite the supply side pressure easing, the company could not gain on margins due to forex impact. The company’s management said it expects that going ahead there is room for improvement.

“Our strategy of prudence and operational excellence helped us through the uncertainties of FY’23. We continue to return cash to shareholders through a consistent dividend policy. We move into the next fiscal, with sharper focus on productivity improvements, cash and value creation for our stakeholders,” said Rohit Anand, chief financial officer of Tech Mahindra

Earnings pressure was seen across verticals. Retail, transport and logistics was down 10.4 per cent on sequential basis, CME was flat 0.7 per cent, technology was flat, and BFSI was soft at 0.3 per cent growth.