Tech Mahindra Q3 Results: Profit Rises 2.2% But Misses Estimates, Attrition Inches Up

Tech Mahindra Ltd.'s quarterly profit rose but missed estimates.

The company's net profit increased 2.2% sequentially to Rs 1,368.5 crore in the quarter ended December, according to its exchange filing. That compares with the Rs 1,454-crore consensus estimate of analysts tracked by Bloomberg.

Q3 FY22 Highlights (QoQ)

• Revenue rose 5.2% to Rs 11,450.8 crore, against the estimated Rs 11,413 crore.

• Total costs increased 5.6% to Rs 9,785.8 crore.

• Other income fell 21% to Rs 223.1 crore.

• Ebitda up 3.3% at Rs 2,060 crore, compared with Rs 2,113-crore forecast.

• Attrition stood at 24% against 21%.

In dollar terms, revenue rose 4.1% sequentially, while profit after tax increased 1.5%. Attrition also increased on an annual basis, in line with the industry trends. The company headcount rose by 3,874 to 1,45,067 in the quarter ended December.

"The company's betting on niche digital capabilities and future-ready workforce to deliver broad-based profit growth," CP Gurnani, managing director and chief executive officer at Tech Mahindra, was quoted as saying in a statement accompanying the filings.

Tech Mahindra said it bagged several "strategic deals" in Europe, Africa, U.S. and Philippines in the three-month period. It announced partnerships with ARM 5G Solutions Lab to develop and test novel 5G technology and use cases. It has partnered Cogniac to provide AI-based machine vision solutions for global enterprises.

Its strategic activity, according to Bloomberg data, includes 12 M&A deals, one investment and another deal worth Rs 21,490 crore over the past three months.

Of the 51 analysts tracking the company, 44 rated a 'buy', five suggested a 'hold' and two recommended a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 24.3%.

Shares of Tech Mahindra closed 1.87% higher on Tuesday, compared with the S&P BSE Sensex's 1.46% gain.