In Short:
Tech Mahindra reported a strong quarterly performance with a 46.8% rise in net profit to ₹1,250 crore and a 2.4% increase in revenue to ₹13,313 crore, driven by $603 million in deal wins. They added 6,653 employees, reducing attrition to 10.6%. The company remains focused on client relationships and operational excellence, resulting in improved margins for three quarters. A dividend of ₹15 per share was announced.
Tech Mahindra’s Impressive Quarterly Performance
Tech Mahindra, the renowned software services company, has just announced some exciting financial results for the September quarter! The company recorded an impressive 46.8% sequential surge in net profit, bringing it to a remarkable ₹1250 crore. Additionally, its revenue climbed by 2.4% to reach ₹13,313 crore, thanks to a robust collection of deal wins totaling a spectacular $603 million.
Strong EBITDA and Dollar Performance
The company showcased a noteworthy EBITDA of ₹1750 crore, marking an 11.9% quarter-over-quarter increase. When looking at the numbers in US dollars, Tech Mahindra saw an impressive 46.1% increase in net profit which amounted to $149 million. Revenue in dollar terms also saw a rise of 1.9%, hitting $1.6 billion. The company’s constant currency revenue demonstrated a modest growth of 0.7% sequentially, and its EBITDA margin expanded by 110 basis points to reach 13.1%, which reflects a substantial growth of 480 basis points year-on-year.
- Also read: Tech M net profit up 23 per cent at ₹851 crore in first quarter
Steady Growth and Optimized Performance
According to Rohit Anand, the Chief Financial Officer, “This quarter we see consistent performance around increasing deal wins, revenue growth, cost optimisation, and steady free cash flow generation as we continue our journey towards FY27 stated targets.” Just to recap, in Q1, the company secured significant deals with a total contract value of $534 million.
Sector Trends and Competition
Despite a generally soft IT services sector, Mohit Joshi, the Chief Executive Officer and Managing Director, noted their efforts to enhance client relationships and broaden the partner ecosystem. They have also maintained a strong focus on operational excellence through their ongoing Project Fortius, which has facilitated margin expansion for the third consecutive quarter.
While rivals like Wipro and HCL Technologies posted robust results in Q2, Infosys also celebrated a successful quarter and revised its guidance upwards, although it unfortunately didn’t fully meet investor expectations. In contrast, Tata Consultancy Services faced challenges with contracting margins, although their revenue growth exceeded analyst forecasts.
Headcount Growth and Financial Health
By the end of the quarter, Tech Mahindra had a headcount of 154,273, having added 6653 employees during this period. The attrition rate stood at 10.6%.
- Also read: Tech Mahindra Q2 net profit rises 153% YoY to ₹1,250 crore
Strong Cash Flow and Strategic Deals
The company’s financial maneuvers were also noteworthy, generating free cash flows of $157 million and ending the quarter with a cash reserve of ₹6566 crore. Additionally, they announced a dividend of ₹15 per share.
In an impressive showcase of their capabilities, during the quarter, they were selected by a leading European cloud service provider for an Autonomous Operations Program, engaged by a European telecom company to enhance quality and efficiency, entered into a managed services agreement with a Canadian communications and media technology firm, and also secured an order from Australia’s top telecom company aimed at enhancing customer experience services.
