Tech Mahindra Q3 Results: Revenue Up 4.6%, Profit Flat In Seasonally Weak Quarter

Tech Mahindra' net profit rose 1% sequentially to Rs 1,296 crore on the back of revenue that increased 4.6% to Rs 13,735 crore.

<div class="paragraphs"><p>(Photo: Adnan Abidi/Reuters)</p></div>
(Photo: Adnan Abidi/Reuters)

Revenue of Tech Mahindra Ltd. rose in a seasonally weak quarter as macroeconomic headwinds drove a retreat in discretionary I.T. spending. However, the company's margin expanded.

Revenue of the Pune-headquartered Mahindra Group company increased 4.6% over the previous quarter to Rs 13,735 crore in the three months ended December, according to an exchange filing Monday. That compares with the Rs 13,523-crore consensus estimate of analysts tracked by Bloomberg.

Tech Mahindra Q3 Results: Key Highlights (QoQ)

  • Revenue up 4.6% at Rs 13,735 crore (Estimate: Rs 13,523 crore)

  • EBIT up 12.12% at Rs 1,646 crore (Estimate: Rs 2,112 crore)

  • EBIT margin at 11.98% vs 11.11%

  • Net profit up 1% at Rs 1,296 crore (Estimate: Rs 1,300 crore)

In dollar terms, Tech Mahindra's revenue rose 1.8% sequentially to $1,668 million. It was up 0.2% in constant currency terms.

The company's revenue from IT services rose 3.5% sequentially to Rs 11,800 crore. The BPO segment earned Rs 1,935 crore—up 11.76% quarter-on-quarter.

“We are witnessing moderation in growth given the tough macroeconomic environment," CP Gurnani, chief executive officer at Tech Mahindra, said in a statement accompanying the quarterly results. "We will continue to work with our customers to pre-empt their technological requirements and identify new demand drivers, especially for digital services.”

Deal activity, however, improved in the October-December period. The total contract value—or net new deal wins—stood at $795 million in Q3 as compared to $716 million during the previous quarter.

The company's attrition rate fell to 17% on a trailing 12-month basis from 20% in the July-September period. Headcount fell 4.2% sequentially to 1,57,068 as on Dec. 31. IT utilisation, excluding trainees, stood at 86%.

"Our numbers reflect resilience as we continue to work on the expansion of operating margin," Rohit Anand, chief financial officer at Tech Mahindra, said in the statement. "I am confident that our strategy of client centricity and agility combined with delivery-led transformation will help us create value for our customers and stakeholders alike.”

On Monday, shares of Tech Mahindra rose 0.58% to end at Rs 1,036.15 apiece on the BSE, even as the benchmark Sensex ended the day 0.29% higher at 59,500.41 points. The quarterly results were declared after market hours.