Tech Mahindra reports 26% rise in Q2 profit, revenue up 16%

IT services firm Tech Mahindra Ltd reported quarterly revenue that beat street expectations but posted a profit after tax that was marginally below consensus for the three months ended September 30.

Tech Mahindra reported a net profit of Rs 1,339 crore, down 1.2% from the first quarter on a sequential basis but 26% higher year on year. Analysts were expecting a profit of around Rs 1,400 crore.

The company’s revenue, however, grew 6.7% quarter on quarter and 16.1% over the second quarter last year to Rs 10,881 crore.

Tech Mahindra shares, which are trading close to their 52-week highs, were up 0.42% to close at Rs 1,524.4 apiece on Monday. The IT firm, which announced a couple of overseas acquisitions in the July-September period, declared its financial results after trading stopped for the day.

Tech Mahindra Q2: Other highlights

1) EBITDA at Rs 1,995 crore; up 6.3% QoQ and 17.2% YoY.

2) The board has proposed a special dividend of Rs 15 per share (300%).

3) No. of active clients increased from 1,058 to 1,123 during the quarter.

4) Attrition has shot up to 21% from 17% in the first quarter and 14% in same quarter last year.

Tech Mahindra management commentary

CP Gurnani, Managing Director and Chief Executive Officer at Tech Mahindra, said the company recorded its highest sequential growth in a decade.

“We have witnessed strong traction across all key markets as we invest in our digital capabilities through strategic partnerships. We continue to accelerate our clients’ digital journey by creating Human Centric Experiences, helping them gear up for tomorrow, today,” he said.

Milind Kulkarni, Chief Financial Officer at Tech Mahindra, said, “Our strong execution has ensured that we maintain our profitability margins while accelerating growth momentum. We remain committed on the operational excellence journey we have boarded, and continue to create value to shareholders through efficient capital return.”