- Tech Mahindra will start phased salary hikes from Q2 of the current financial year
- Q1 net profit rose 8.2% sequentially to Rs 1,465 crore but missed analyst estimates
- Revenue increased 4.2% QoQ to Rs 15,712 crore, with operating margin up 70 basis points
Tech Mahindra Ltd. will begin rolling out salary hikes from the second quarter of the current financial year in a phased manner, as the IT services company reported lower employee attrition and a decline in headcount for the quarter ended June 30.
"We expect to be able to announce it effective Q2, obviously in a phased fashion," Chief Executive Officer and Managing Director Mohit Joshi said during the company's post-earnings conference call. "It will start becoming effective Q2 in a phased fashion," he said, adding that employees would be informed in the coming days.
The update comes after Tech Mahindra reported June-quarter earnings that missed analysts' profit estimates, even as revenue and operating margin improved sequentially.
Tech Mahindra reported a consolidated net profit of Rs 1,465 crore for the June quarter, up 8.2% sequentially from Rs 1,354 crore but below the Bloomberg consensus estimate of Rs 1,607 crore. Revenue from operations rose 4.2% quarter-on-quarter to Rs 15,712 crore, broadly in line with analysts' expectations of Rs 15,422 crore.
Tech Mahindra Q1 Results (Consolidated, YoY)
- Net profit up 8.2% to Rs 1,465 crore from Rs 1,354 crore (Bloomberg estimate: Rs 1,607 crore)
- Revenue up 4.2% to Rs 15,712 crore from Rs 15,076 crore (Estimate: Rs 15,422 crore)
- Ebit up 9.2% to Rs 2,264 crore from Rs 2,073 crore (Estimate: Rs 2,168 crore)
- Margin up 70 basis points to 14.4% from 13.7% (Estimate: 14.1%)
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Attrition Drops To Lowest Level In A Year
Tech Mahindra's annualised attrition rate declined to 11.8% during the April-June quarter from 12.1% in the preceding three months and 12.6% a year earlier.
The company ended the quarter with a total workforce of 146,760 employees, down by 688 from the March quarter.
Its core IT workforce fell below 75,000 employees for the first time in recent quarters. The IT headcount stood at 74,689 as of June 30, compared with 75,377 three months earlier. Compared with a year ago, the company has reduced its IT workforce by 5,298 employees from 79,987.
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Asked whether hiring would resume after the decline in employee numbers, Joshi said the company expects recruitment to pick up as revenue grows.
"We see a good trajectory for revenue growth for the remainder of the year and I assume that that will mean hiring in the remainder of the year," he said. "That should absolutely happen."
He attributed the reduction in headcount to productivity gains in fixed-price projects, helped by AI-led efficiencies, which reduced the need for backfilling roles.
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