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Informist, Friday, Jan. 17, 2025

 

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--Tech Mahindra Oct-Dec consol net profit INR 9.83 bln 
--Analysts saw Tech Mahindra Oct-Dec consol net profit INR 10.65 bln 
--Tech Mahindra Oct-Dec consol PAT INR 9.83 bln vs INR 12.50 bln qtr ago 
--Tech Mahindra Oct-Dec consol sales INR 132.9 bln vs INR 133.1 bln qtr ago 
--Tech Mahindra Apr-Dec consol PAT INR 30.85 bln vs INR 16.97 bln year ago 
--Tech Mahindra Apr-Dec consol sales INR 396.04 bln vs INR 391.24 bln yr ago 
--Tech Mahindra Oct-Dec consol revenue up 1.2% on qtr in constant currency 
--Tech Mahindra Oct-Dec consol EBITDA INR 18.09 bln, up 3.4% on qtr 
--Tech Mahindra Oct-Dec consol EBITDA margin 13.6%, up 40 bps on qtr 
--Tech Mahindra Oct-Dec new deal wins worth $745 mln vs $603 mln qtr ago 
--Tech Mahindra Oct-Dec communications vertical sales down 4% on qtr 
--Tech Mahindra Oct-Dec manufacturing vertical sales down 3.7% on qtr 
--Tech Mahindra Oct-Dec BFSI vertical sales up 0.4% on qtr 
--Tech Mahindra Oct-Dec total headcount 150,488, down 2.5% on qtr 
--Tech Mahindra IT services last 12-month attrition 11%, unch on qtr 
--Tech Mahindra Oct-Dec revenue from Americas down 1.8% on qtr 
--Tech Mahindra Oct-Dec revenue from Europe down 3% on qtr 
--Tech Mahindra Oct-Dec active clients 1,175 vs 1,178 qtr ago 
--Tech Mahindra: Oct-Dec IT services utilisation 86%, unch on qtr 
--Tech Mahindra Oct-Dec free cash flow $199 mln vs $157 mln qtr ago

 

By Arya S. Biju and Steffy Maria Paul

 

MUMBAI – Tech Mahindra Ltd. reported lower-than-expected earnings for the December quarter with both the top line and bottom line seeing a sequential fall. The information technology company reported a double-digit sequential decline in consolidated net profit for the quarter, breaking four consecutive quarters of sequential growth, while its consolidated revenue fell marginally on quarter. The fall in sales was led by weak performance of the company's communications and manufacturing verticals and lower revenues from Europe.

 

The consulting and digital solutions provider's consolidated net profit for the quarter fell 21.4% sequentially to INR 9.83 billion, lower than analysts' estimate of INR 10.65 billion. Its consolidated revenue fell marginally on quarter to INR 132.85 billion, lower than analysts' estimate of INR 133.68 billion. However, year on year, the consolidated net profit rose around 93%, and consolidated revenue rose 1.4%. 

 

For the nine months to December, the company's consolidated net profit grew 82% to INR 30.85 billion, up from INR 16.97 billion a year ago. The consolidated revenue from operations for Apr-Dec was INR 396.04 billion, up only 1.2% from INR 391.24 billion reported for the same period a year ago.

 

In dollar terms, the company reported a revenue of $1.57 billion for the December quarter, down 1.3% sequentially, largely in line with analysts' estimate of $1.58 billion. In constant currency terms, the information technology company's consolidated revenue grew 1.2% sequentially. 

 

The operating margin, or earnings before interest and tax margin, of the company increased to 10.2% from 9.6% a quarter ago. Growth in the EBIT margin and operating profit after tax in the quarter was supported by the company's margin expansion programme Project Fortius and steady increase in new deal wins across prioritised verticals and markets, Rohit Anand, Tech Mahindra's chief financial officer, said in a press release. Project Fortius, announced by the company during the analysts' call after the company released its earnings for financial year 2023-24 (Apr-Mar), was aimed at achieving a 15% margin by 2026-27 and growing its revenue at a faster pace compared to industry peers.

 

The company's EBIT for the quarter was INR 13.50 billion, up 5.4% on quarter. The earnings before interest, taxes, depreciation, and amortisation for the December quarter was INR 18.09 billion, up 3.4% on quarter and higher than analysts' estimate of INR 17.76 billion.

 

The technology service provider's total contract value of new deals for the quarter rose around 23% sequentially to $745 million. The company has seen an improved rate of deal wins in its key verticals and prioritised markets, Chief Executive Officer and Managing Director Mohit Joshi said in the press release.

 

The company's total expenses for the quarter fell slightly sequentially to INR 120.11 billion. The company's employee benefit expense fell 1% on quarter to INR 74.25 billion and its subcontracting expenses also fell 4% on quarter to INR 14.59 billion. 

 

The revenue from the company's communications vertical fell 4% sequentially and 5.6% on year. This segment contributed to over 32% of the company's revenue during the reporting quarter. The manufacturing segment's revenue fell 3.7% sequentially and 7.2% on year. The revenue from the hi-tech and media segment fell 1.5% sequentially, but rose 3.5% on year. The banking, financial services, and insurance segment, the company's third largest in terms of revenue contribution, reported a 0.4% sequential decline in revenue growth. However, this segment's revenue rose 8.3% on year.

 

The IT giant's revenue from the Americas was 50.8% of the total, as compared to 51.1% a quarter ago. The company's revenue from Europe was 23.6% of the total, down 3% from a quarter ago. The company's free cash flow for the quarter was $199 million, up 27% on quarter. 

 

Tech Mahindra's number of active clients as of Dec. 31 was 1,175, three fewer than a quarter ago. Tech Mahindra said 191 of these contributed more than $5 million each to revenue. The number of such clients was, however, down by four from a quarter ago. The company also said 104 clients contributed more than $10 million each to the revenue during the December quarter, with 25 clients contributing more than $50 million each. The revenue contribution from the company's top 5 clients was 15%, and 24% from the top 10 clients.

 

As of Dec. 31, the total employee count of Tech Mahindra fell 2.5% on quarter to 150,488. The last 12-month attrition in IT services was unchanged on quarter at 11%. The company's employee utilisation, excluding trainees, was also unchanged on quarter at 86% for the reporting quarter. 

 

On Friday, shares of the company closed at INR 1,660.30, down 1.6%, on the National Stock Exchange. The company detailed its earnings for Oct-Dec after market hours.  End

 

US$1 = INR 86.61

Edited by Rajeev Pai

 

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