Tech Mahindra Q2 Net Rises 27% on Higher Margins

Tech Mahindra, the IT arm of Mahindra group, Tuesday posted a 27.3 per cent growth in September quarter net at Rs 1,064 crore, aided largely by widening of margins due to rupee depreciation, changing business mix and better utilisation.

The fifth largest IT services exporter had posted a post tax net of Rs 836.2 crore in the year-ago period.

The company’s total revenues grew by 13.5 per cent to Rs 8,630 crore.

However, on a quarter on quarter basis, which is tracked closely by the market, the company showed some softness in revenue growth at 4.3 per cent due to a drag in the healthcare segment.

Managing director and chief executive CP Gurnani said it was expecting the softness in healthcare as two projects were coming to an end but underlined that the company is satisfied with the show.

He said telecom is doing well and showed a 4 per cent growth in revenues over the preceding quarter and added that the migration to 5G in the developed markets.

Operating margins widened 2.4 percentage points to 18.8 per cent for the quarter, helped by rupee depreciation (0.80 per cent), operational efficiencies (0.60 per cent) and dip in visa costs, its chief financial officer Manoj Bhat said.

Gurnani said there are more operating levers available to widen the margins further and without giving a number, added that the company will continue to pursue the agenda.

He said only 48 per cent of the company’s revenues come in USD, while the rest are from other currencies which have also depreciated against the dollar, just like the rupee.

Bhat said that the company will strive to maintain the gains which have accrued from the rupee depreciation, and added that it continues to hedge against receivables wherein its book stands at USD 1.6 billion equivalent.

It had cash and equivalent of USD 1.1 billion on the books as of September 30.

The upcoming digital revenues opportunity now constitutes 31 per cent of the revenue base and will keep climbing, Gurnani said.

During the quarter, it won deals worth USD 550 million, including a USD 300 million win in the communications segment, he said.

He said the investments done by the company in training are helping it at the present juncture.

It’s total headcount grew by 4,839 during the quarter to 1.18 lakh employees.

The company’s stocks ended 2.91 per cent higher at Rs 683.65 apiece on the BSE Tuesday, against 0.52 per cent decline in the benchmark. – Business Standard