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Informist, Saturday, Oct. 19, 2024

 

--Tech Mahindra Jul-Sept consol net profit INR 12.50 bln

--Analysts saw Tech Mahindra Jul-Sept consol net profit INR 9.82 bln

--Tech Mahindra Jul-Sept consol PAT INR 12.50 bln vs INR 8.52 bln qtr ago

--Tech Mahindra Jul-Sep consol sales INR 133.1 bln vs INR 130.06 bln qtr ago

--Tech Mahindra to pay INR 15 per share interim dividend

--Tech Mahindra Apr-Sept consol net profit INR 21.02 bln vs INR 11.86 bln

--Tech Mahindra Apr-Sep consol sales INR 263.2 bln vs INR 260.2 bln year ago

--Tech Mahindra: Jul-Sept constant currency revenue rose 0.7% on quarter

--Tech Mahindra: Won new deals worth $603 mln in Jul-Sept 

--Tech Mahindra: Jul-Sept EBIT margin 9.6% vs 8.5% quarter ago 

--Tech Mahindra: Jul-Sept EBIT INR 12.80 bln, up 16.2% on quarter 

--Tech Mahindra: Jul-Sept communications vertical sales up 2.7% on quarter 

--Tech Mahindra: Jul-Sept manufacturing vertical sales down 4% on quarter 

--Tech Mahindra: Jul-Sept BFSI vertical sales up 2.4% on quarter 

--Tech Mahindra: Total headcount rose 4.5% QoQ to 154,273 in Jul-Sept 

--Tech Mahindra: IT services last 12-month attrition 11% vs 10% qtr ago 

--Tech Mahindra: Jul-Sept active clients 1,178 vs 1,165 quarter ago 

--Tech Mahindra: Saw consistent performance on more deal wins, sales growth 

--Tech Mahindra: Saw consistent performance on cost optimisation 

--Tech Mahindra: Continue to progress even as IT svcs industry remained soft 

--Tech Mahindra: Jul-Sept free cash flow $157 mln 

 

By Gopika Balasubramanium and Anjana Therese Antony

 

MUMBAI – Beating the analysts' expectations on key earnings metrics, Tech Mahindra Ltd. during the September quarter reported the highest sequential growth in consolidated net profit in at least 20 quarters. This was led by more deal wins during the quarter, improved performance in its core communication segment, and cost optimisation measures.

 

The technology giant reported a consolidated net profit of INR 12.50 billion, up nearly 47% on quarter and over 150% on year. This was significantly higher than the Street's estimate of INR 9.82 billion. The company's consolidated revenue rose over 2% on quarter to INR 133.10 billion, beating analysts' expectations of INR 131.90 billion. Its sales growth in Jul-Sept was the highest in seven quarters.

 

"We continue to progress on our strategic improvement efforts even as the overall IT services industry has remained soft," Mohit Joshi, the chief executive officer, was quoted in a press release. Tech Mahindra, along with other Indian IT companies, had borne the brunt of weak demand and discretionary spending trends, and high interest rates in the US for almost two years. However, there are green shoots in demand recovery and clients' discretionary spending, which could make things better in 2025-26 (Apr-Mar), analysts had said.  

 

For the six months ended Sept. 30, Tech Mahindra reported a consolidated net profit of INR 21.02 billion on consolidated revenues of 263.2 billion. Its net profit grew 77.1% on year and its revenue rose 1.1%. Its board approved an interim dividend of INR 15 per share, the company said in a press release. 

 

In constant currency terms, the information technology company's consolidated revenue grew 0.7% sequentially. The company's earnings before interest and tax margin rose 9.6% from 8.5% growth in the June quarter, supported by its three-year margin expansion programme, Project Fortius, and currency tailwinds. Project Fortius was announced by the company during its Jan-Mar post-earnings call, aimed at achieving 15% margin by FY27 and growing its revenue at a faster pace compared to its industry peers. The company's EBIT increased to INR 12.80 billion in the September quarter from INR 11.02 billion in Apr-Jun.

 

"This quarter we see consistent performance around increasing deal wins, revenue growth, cost optimisation and steady free cashflow generation as we continue our journey towards FY27 stated targets," Rohit Anand, chief financial officer, was quoted in the press release. Tech Mahindra's net deal wins for the quarter were $603 million, higher than the $534 million it received in the previous three months. Its free cash flow was $157 million in Jul-Sept. 

 

As of Sept. 30, the total employee count of the technology giant rose to 154,273, up 4.5% on quarter or 6,653 employees. Last 12-month attrition in IT services rose to 11% from 10% a quarter ago.  

 

 

The core communications vertical, which contributed to over 33% of revenue, posted a sequential growth of 2.7% in revenue after declining for six quarters. However, its revenue fell 1.7% from a year ago. Its third-most revenue contributor--banking, financial services, and insurance vertical, which is 15.8% of revenue--improved sequentially by 2.4%, higher than the 0.7% growth posted a quarter ago. Among the top six divisions, revenue from hi-tech and media grew the most at 5.7% on quarter. On other hand, its second-largest segment, manufacturing, slumped 4% on quarter, though it grew 0.6% on year. 

 

The IT behemoth's revenue from the Americas was more than 51% of the total, which, however, declined from 52.4% a quarter ago. Tech Mahindra's number of active clients as of Sept. 30 is 1,178 from 1,165 a quarter ago, among which it gained four new clients under the $5-million category. 

 

Shares of Tech Mahindra closed 0.7% lower at INR 1,687.90 Friday on the National Stock Exchange. The company's post-earnings conference call is scheduled at 1730 IST Saturday.  End

 

US$1 = INR 84.07

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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