Tech Mahindra Q1 net profit up 39% to Rs 1,353 cr

Tech Mahindra Q1 net profit up 39% to Rs 1,353 cr

Pune: ’s first-quarter net profit rose about 39 per cent to Rs 1,353 crore, while revenue was up 12 per cent at Rs 10,198 crore, the IT services provider said on Thursday.

In dollar terms, profit was up around 42 per cent at $183.2 million, while revenue climbed 14.6 per cent to about $1.38 billion in the April-June period.

“We have witnessed an all-rounded performance this quarter with growth across our key markets and industry sectors. We continue to see strong traction in large deal wins as we are helping our customers in integrated digital transformation,” managing director and chief executive CP Gurnani said.

The company does not provide forward guidance.

Gurnani, however, said the company expected to match or improve on the growth trajectory seen during the quarter.

Tech Mahindra said it had created a new technology vertical that will work with product engineering firms and hyperscalers.

Gurnani said this could be among the highest growth sectors going forward. This segment now contributes about 8 per cent to total revenues and is growing at over 22 per cent.

“There is huge growth in 5G and we are seeing some large businesses come through 5G deals,” he said. The enterprise and communications verticals also grew well during the quarter.

“We continue to build on our profitability journey and have reported the highest ever quarterly revenue and profit after tax this quarter,” said chief financial officer Milind Kulkarni.

The BPS (Business Process Services) business grew 11 per cent sequentially.

Analysts said the company’s broad-based growth beat estimates.

“Tech Mahindra delivered better-than-expected performance across all financial parameters, with healthy deal wins and decent FCF (free cash flow) generation. Constant currency revenue grew 3.9 per cent q-o-q, ahead of our estimates, led by 4.5 per cent growth in the enterprise segment and 2.9 per cent q-o-q growth in the CME segment,” Sanjeev Hota, Head of Research at Sharekhan by BNP Paribas, said in a note.

“EBIT margin contracted 133 bps (basis points) q-o-q to 15.2 per cent owing to wage revision, visa costs, and higher subcontractor expenses. EBIT margin decline remained lower than our estimates, led by higher utilization, improving offshoring and operational efficiencies,” he added.

Tech Mahindra’s total headcount as of June 30 was 126,263 with an addition of 5,209 people during the quarter.

The attrition rate was at 17 per cent and is expected to continue over the course of the year, with the company intending to hire three times more freshers than normal.

The company has vaccinated 80 per cent of its employees and nearly 20 per cent have started working from offices voluntarily.

Gurnani said people are not required to return to offices till the end of this year unless they want to, in which case they should take both doses of the vaccine.

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