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Informist, Thursday, Apr. 24, 2025

 

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--Tech Mahindra Jan-Mar consol PAT INR 11.67 bln vs INR 9.83 bln qtr ago 
--Analysts saw Tech Mahindra Jan-Mar consol net profit INR 10.63 bln 
--Tech Mahindra Jan-Mar consol sales INR 133.84 bln vs INR 132.86 bln qtr ago 
--Tech Mahindra to pay INR 30 per share final dividend 
--Tech Mahindra FY25 consol PAT INR 42.52 bln vs INR 23.58 bln year ago 
--Tech Mahindra FY25 consol sales INR 529.88 bln vs INR 519.96 bln year ago 
--Tech Mahindra Jan-Mar consol revenue up 0.3% on year in constant currency 
--Tech Mahindra Jan-Mar consol EBIT margin 10.5%, up 40 bps on qtr 
--Tech Mahindra Jan-Mar new deal wins worth $798 mln 
--Tech Mahindra Jan-Mar total headcount 148,731 down 1,757 from previous qtr 
--Tech Mahindra IT services last 12-month attrition 11.8% 
--Tech Mahindra Jan-Mar communications vertical sales up 1% on qtr 
--Tech Mahindra Jan-Mar mfg vertical sales down 0.2% on qtr 
--Tech Mahindra Jan-Mar BFSI vertical sales up 2.4% on qtr 
--Tech Mahindra Jan-Mar IT services utilisation 86.3% vs 85.6% qtr ago 
--Tech Mahindra Jan-Mar active clients 1,162 vs 1,176 qtr ago 
--Tech Mahindra Jan-Mar consol EBIT $163 mln vs $159 mln qtr ago 
--Tech Mahindra Jan-Mar revenue from Americas down 5.9% on qtr 
--Tech Mahindra Jan-Mar revenue from Europe up 6.3% on qtr 

 

By Anjana Therese Antony

 

MUMBAI – Tech Mahindra Ltd. saw stronger sequential growth in key earnings metrics than many of its  information technology peers in the March quarter. The Pune-based company's net profit grew in double digits to beat expectations, while its revenue rose in the low single digit and failed to meet the Street's view. Weakness in some key segments such as communications, manufacturing, and hi-tech led to the muted growth in the company's top line for the quarter. 

 

India's fifth-largest IT company posted sequential growth of nearly 19% in consolidated net profit for Jan-Mar to INR 11.67 billion, higher than the Street's estimate of INR 10.63 billion. Its consolidated revenue rose 0.7% on quarter to INR 133.80 billion, slightly lower than the expectation of INR 134.36 billion. From the year-ago period, the bottom line rose over 76% and the top line increased nearly 4%. In dollar terms, the company's revenue declined to $1.55 billion in Jan-Mar from $1.57 billion a quarter ago. The IT player's top line in constant currency terms fell 1.5% sequentially, worse than the 0.6?cline Kotak Institutional Equities had anticipated. From the year-ago period, the company's sales rose 0.3% in constant currency terms.

 

Among other key earnings metrics, the company's earnings before interest and tax rose 4.1% sequentially and 48.5% on year to INR 14.05 billion. In dollar terms, the operating profit rose 2.8% on quarter and nearly 44% on year to $163.00 million. The EBIT margin during the final quarter expanded 40 basis points to 10.5%, which is higher than the 10.3% analysts had expected. 

 

"This year (financial year 2024-25), we delivered operational excellence by achieving a 60% increase in operating profit through strong execution, operational leverage, and cost management," Chief Financial Officer Rohit Anand said, according to a press release from the company. "We raised our dividend per share by 12.5% and returned 85% of our free cash flow to shareholders."

 

For the financial year ended Mar. 31, Tech Mahindra's consolidated net profit increased by more than 80% to INR 42.52 billion and revenue increased nearly 2% to INR 529.88 billion. The company released its quarterly results Thursday after market hours. Its shares closed 0.4% higher at INR 1,445.20 on the National Stock Exchange.

 

GEOGRAPHIES, SEGMENTS

Tech Mahindra's major market, the Americas, and some of its key verticals saw weaker growth in revenue in the March quarter. Revenue from the Americas, which accounted for more than 48% of the company's sales in the reporting quarter, fell 4.7% on year and 5.9% on quarter. It is likely that the IT company also felt some of the heat from US tariffs through its clients in the world's largest economy. While some IT companies have said they do not expect any major direct impact from the tariffs, they have at the same time issued a caution about possible indirect ripple effects. The contribution from the Americas to Tech Mahindra's revenue fell to 48.4% in the March quarter from 50.8% a year ago as well as a quarter ago.

 

On the other hand, revenue from Europe rose 5.1% on year and 6.3% from a quarter ago to account for 25.4% of Tech Mahindra's revenue in Jan-Mar, against a share of 23.6% in Oct-Dec and 24.2% in the year-ago period.

 

Of the company's six major verticals, four saw a sequential fall in revenue, which in turn was reflected in Tech Mahindra's muted overall top-line growth. The revenue from its second-biggest vertical, manufacturing, fell 0.2%. Revenue from the hi-tech and media vertical fell more than 8%, retail declined 0.4%, and healthcare and life sciences decreased by 5.6% on quarter.

 

On the other hand, Tech Mahindra's revenue from its biggest vertical--communications--saw 1% sequential growth in the March quarter. Revenue from the banking, financial services, and insurance vertical, the company's third biggest, rose 2.4%.

 

 

More than 51% of the company's revenue during the reporting quarter was earned in dollars, 12.4% in euros, and nearly 10% in British pounds.

 

DEALS, EMPLOYEES

The IT firm's total contract value during the reporting quarter increased to $798 million from $745 million in Oct-Dec and from $500 million a year ago. The number of Tech Mahindra's active clients fell to 1,162 from 1,175 a quarter ago. The number of its $50 million-plus clients was unchanged at 25, that of $20 million-plus clients fell by 2 sequentially to 59, while the number of the $10 million-plus category increased by 2 to 106.

 

The company's headcount fell 1.2% sequentially to 148,731, of whom 54% were software professionals and 40% were business process service professionals. Its 12-month attrition rate increased to 12% during the reporting quarter from 11% in Oct-Dec. The employee utilisation rate was 86% in the reporting quarter, unchanged from a quarter ago and a year ago.  End

 

US$1 = INR 85.26

 

Edited by Rajeev Pai

 

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