Bangalore / Mumbai: Tech Mahindra’s consolidated net profit increased 39.2% yoy to Rs 1,506 crore for the quarter ended March of fiscal 2021-22 due to the cancellation of certain SEZ-related benefit provisions made in previous quarters and strong performance. The company reported a 24.5% year-over-year increase in consolidated revenue at Rs 12,116 crore due to double-digit growth in verticals, especially the communications vertical.
The operating margin for the Mahindra Group Company it stood at 13.2% in the three months ended March compared to 14.8% in the previous quarter. Company management said this was due to lower usage leading to a 400 basis point drop, and higher wage and retention costs also dragged margins.
The revenue numbers were in line with street estimates as year-over-year revenue growth was seen at 24% according to the average estimate of four brokers surveyed by ET. Earnings growth exceeded the 32% year-on-year estimate provided by intermediaries.
On a sequential basis, net income grew 10% while revenues grew 5.8%. For the financial year ending March, the company’s consolidated revenue increased 17.9% to Rs 44,646. and net profit recorded Rs 5,566 crore, up 25.7%.
The board recommended a final dividend of Rs. 15 per share and a special dividend of Rs 15 per share, subject to regulatory approvals.
CP Gurnani, chief executive officer and chief executive officer, Tech Mahindra said he was “I am pleased with the continuing pace of big business wins.” The company also benefited from an overall tax rate of 17.5% compared to 27% in the third quarter due to the reversal Tax provisions SECT under a new tax regime.
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The company was reconfirmed CP Gurnani as chief executive officer and CEO for another term that expires in December 2023. The company also announced the appointment of Rohit Anand as chief financial officer starting in June. Rohit Anand will take over from current CFO, Milind Kulkarni, who is retiring after working with Tech Mahindra for over two decades.
“Tech Mahindra’s commitment to sustainable digital transformation and investment in new era technology stacks has resulted in one of the fastest and most successful growth in the past 7 years. The company continues to invest in products and platforms. And these platforms are more process oriented or business service oriented, “he added.
The company’s backlog stood at $ 1.01 billion in terms of net new deals over the three-month period. The metric stood at $ 1.04 billion for the period a year ago and $ 704 million for the quarter ended December. This requires the TCV reported for the full year at $ 3.3 billion compared to $ 2.3 billion in fiscal 21.
“I am happy that CME (communications, media and vertical entertainment) will always be the guiding light and they are doing very well. BFSI has joined the billion dollar club, ”Gurnani said.
Ashis Das, research analyst, Sharekhan’s
said the company’s revenue performance met its expectations and outperformed the net performance of the new deal led by the communications vertical. “However, employee retention costs, on-site and travel expenses have reduced margins. The upside is that the friction has remained stable with these interventions, “she said.
The dropout rate for the quarter was flat 24% compared to the December quarter. The headcount grew by 6,106 to 151,173 during the quarter. The company expects to hire over 10,000 freshmen in fiscal 23, as it did in fiscal 22. The company said it granted average salary increases of 8-10% in fiscal 22.
The Indian sector experienced record attrition this quarter with
17.4%, 27.7%, 21.9% and 23.8%.
“I think there is potential concern for both inflation and the geopolitical situation and they are obviously interlinked. But at the moment we have not seen any impact on the demand landscape from our customers, from any of these things, “said Vivek Agarwal, head of business development, Tech Mahindra while answering questions about the demand environment.
Agarwal added that the company will spend ongoing taxes by supplementing the number of acquisitions it has reported over the past year.
The results come a week after the announcement of the LTIMindtree merger, in which the combined entity of the Larsen & Toubro group is poised to overtake Tech Mahindra as the fifth largest IT service provider in the country by market capitalization. LTIMindtree’s combined revenue for fiscal 22 was $ 3.5 billion and a profit of $ 530 million compared to Tech Mahindra’s revenue of $ 5.9 billion and profit of $ 746 million for the same period. Analysts suggest that while both LTI and
have a strong margin performance, at Tech Mahindra’s current growth rate, especially in the CME vertical, will continue to outperform the new company in terms of revenue for at least three years.
Among the geographical areas, on an annual basis, the America region grew by 28.5%, Europe grew by 20.3% and the rest of the world grew by 9.3%. Communications and media grew vertically 23.7% yoy and 4.8% sequentially, while businesses grew vertically 21.9% yoy and 5.8% sequentially. The manufacturing and retail verticals saw a decline in sequential revenue due to seasonality factors.