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Informist, Friday, Jan. 17, 2025

By Narayana Krishna and Gopika Balasubramanium

HYDERABAD – Information technology and software services company Tech Mahindra Ltd. said Friday it is on track to reach the goal of 15% earnings before interest and tax by the financial year 2026-27 (Apr-Mar) and has enough levers to achieve it.

For Oct-Dec, Tech Mahindra reported its EBIT margin at 10.2%, an improvement of 60 basis points, while its earnings before interest, taxes, depreciation, and amortisation margin for the quarter was up by 40 bps at 13.6%.

In a post-earnings press conference, the Tech Mahindra management said the company had identified levers such as cost-cutting and productivity improvement to push the margins higher going forward.

For Oct-Dec, Tech Mahindra reported a 21.4% sequential fall in consolidated net profit to INR 9.83 billion, while revenue for the quarter was INR 132.9 billion, a marginal decline of 0.2% on quarter. Year on year, the net profit was up by 92.6% and revenue was up by 1.4%.

The Tech Mahindra management said the company's subcontracting costs were high earlier and the company had identified where to reduce them and implemented measures that had resulted in an improvement in margin for the reporting quarter. These measures are expected to continue making an impact in the upcoming quarters.

"We continue to look at that (cost cuts) and improve (margins). That is a metric. We've also focused a lot on pricing. I think that's a track that we really delivered on. We continue to drive improvement and deliver excellence in our fixed-price projects. That's another area we're focusing on," the management said.

The management further said the company saw healthy deal wins in the technology, media, and entertainment space and encouraging progress in the banking, financial services, and insurance vertical and the healthcare and life sciences vertical. "While these new deal wins will help us scale our priority verticals, we have made sure to chase quality over quantity," it said. "We have onboarded 40 new clients from our must-have accounts so far in the current fiscal (FY25)."

Of these 40 new clients, 12 were brought on board in the December quarter, the company said, adding that Tech Mahindra has won six large deals from must-have accounts in the current financial year. These must-have accounts now have an annual revenue run rate of more than $1 million each, the management said. All these deal wins are focused on sustainability to achieve revenue growth goals with quality, it said.

The company said it has signed deals with Europe-based telecommunication companies to deploy generative artificial intelligence tools and models and is working on several other tools in this segment.

Tech Mahindra said it had hired 4,700 freshers so far in FY25. The company's headcount was 150,488 as of Dec. 31 and attrition for the quarter was 11.2%.

Tech Mahindra said the Oct-Dec earnings were impacted by cross-currency headwinds. The company had a hedge book of $2.1 billion as of Dec 31 and the average exchange rate for the dollar against the rupee for the quarter was $84.73. The effective tax rate for the quarter was 23.8%.

On Friday, shares of Tech Mahindra ended at INR 1,660.30 on the National Stock Exchange, down 1.6% from its previous close. The company detailed its earnings after the stock markets closed.  End

US$1 = INR 86.61

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

Edited by Rajeev Pai

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