Tech Mahindra Q1 Results: Net Profit Falls 38 Per Cent YoY To Rs 693 Crore

Tech Mahindra’s revenue skids 4 per cent sequentially to $1600.7 million (Rs 13,159 crore) missing analyst estimates, in a quarter that has been a washout among all the large IT firms

Indian IT services firm Tech Mahindra on Wednesday reported a 38.8 per cent fall in its consolidated net profit to Rs 692.5 crore in the quarter ended June (Q1) as compared to Rs 1,131.6 crore in the same quarter last year. Tech Mahindra’s revenue skids 4 per cent sequentially to $1600.7 million (Rs 13,159 crore) missing analyst estimates, in a quarter that has been a washout among all the large IT firms.

The company’s revenue has fallen 4.2 per cent in constant currency terms, making this the steepest fall among its peers. Wipro and HCLTech also saw a decline in revenue this quarter.

Chief Executive Officer (CEO) C P Gurnani said that this is one of the toughest quarters he has seen in the past five years.

The company's margins were a big miss, and fell way more than what was estimated. EBIT margins came in at 6.8 per cent, a fall of 440 bps from last quarter's 11.2 per cent, making this also the weakest among its peers. Defending its margins is something that Tech Mahindra has continued to struggle with as it has remained the lowest among its peers.

Gurnani in a statement said that the company's numbers this quarter "reflects the uncertainty in the global economy and the IT sector." However, he added, “We are confident that we have the right strategy and the right team to overcome this temporary setback and deliver long-term value for our customers and shareholders.”

Tech Mahindra’s total contract value (TCV) or deal wins stood at $359 million, down from $592 million (-39.36 per cent) in the last quarter, and $802 million (-55.24 per cent) in the same quarter last year.

The troubled times that Tech Mahindra finds itself are also seen in its net addition numbers, with its headcount having shrunk sequentially by 4,103. This is the third consecutive decline for Tech Mahindra, during which it has seen its headcount reduce by over 15,000 employees on a net basis. This comes even as the company's attrition has fallen to 13 per cent, the lowest among its peers, and its utilisation is at 87 per cent.

Tech Mahindra’s share price closed at Rs 1,144.05 apiece, down 0.84 per cent, on the BSE on Wednesday.