Tech Mahindra, the Mahindra Group’s IT subsidiary, on Wednesday reported a 34% year-on-year jump in profit for the first quarter ended June, helped by lower subcontracting expenses.
Net profit at Rs 1,140.6 crore was 2% lower sequentially on lower tax write-back compared with the March quarter.
Revenue at the nation’s fifth largest software service provider rose 2.7% from a year earlier to Rs 13,351 crore. Its largest region for business, the Americas that accounts for nearly half of its revenue, posted an almost 6% drop in revenue, but growth in Europe and the rest of the world more than offset the impact.
Sequentially, however, revenue was 0.2% lower.
“The performance was driven by growth in communications, retail and BFSI (banking, financial services and insurance) verticals. The year-on-year headwinds were primarily due to our pre-services business, which we are rightsizing as previously shared. We also saw spend reductions in the automotive sector, which impacted year-on-year revenue performance,” said chief executive and managing director Mohit Joshi.
“The market is still very, very volatile. We are seeing a continued slowdown in the auto portfolio, manufacturing portfolio; telecoms is relatively stable…It's a mixed picture, and I feel that it's too early to say whether the tide has turned towards significant growth or a recession,” he added.
Its largest vertical, communications that contributes one-third to revenue, grew both YoY and sequentially. Manufacturing shrank 4% from a year ago, though the performance improved from the previous quarter, against industry trends.
Exuding optimism on the deals it signed, Joshi said: “We have been reporting steady and increasing deal wins…We do see the fact that we are able to convert these deals…our largest clients are growing much faster than the company average.”
Deal wins increased by 44% on a last twelve months basis, supported by broad-based momentum across verticals and geographies, he said.
The Pune-headquartered company recorded strong net new bookings at $809 million in the past quarter, higher both sequentially ($798 million) and from a year ago ($534 million).
Operating margin improved to 11.1% from 10.5% in the previous quarter and 8.5% in the June quarter of last year, helped by optimisation from its margin improvement programme, Project Fortius, and reduced offshore employee base.
“This marks our seventh consecutive quarter of margin expansion,” said chief financial officer Rohit Anand.
Headcount at 148,517 as of end-June reduced by 214 from the previous quarter but increased by 897 from a year earlier.
Along industry lines, employee attrition rate for the quarter came in higher at 12.6% from 11.8% in March quarter and from 10.1% in Q1FY25.
“Hiring will really be dependent on how we see the overall demand picture lay out for the rest of the year,” Joshi added.
Net profit at Rs 1,140.6 crore was 2% lower sequentially on lower tax write-back compared with the March quarter.
Revenue at the nation’s fifth largest software service provider rose 2.7% from a year earlier to Rs 13,351 crore. Its largest region for business, the Americas that accounts for nearly half of its revenue, posted an almost 6% drop in revenue, but growth in Europe and the rest of the world more than offset the impact.
Sequentially, however, revenue was 0.2% lower.
“The performance was driven by growth in communications, retail and BFSI (banking, financial services and insurance) verticals. The year-on-year headwinds were primarily due to our pre-services business, which we are rightsizing as previously shared. We also saw spend reductions in the automotive sector, which impacted year-on-year revenue performance,” said chief executive and managing director Mohit Joshi.
“The market is still very, very volatile. We are seeing a continued slowdown in the auto portfolio, manufacturing portfolio; telecoms is relatively stable…It's a mixed picture, and I feel that it's too early to say whether the tide has turned towards significant growth or a recession,” he added.
Its largest vertical, communications that contributes one-third to revenue, grew both YoY and sequentially. Manufacturing shrank 4% from a year ago, though the performance improved from the previous quarter, against industry trends.
Exuding optimism on the deals it signed, Joshi said: “We have been reporting steady and increasing deal wins…We do see the fact that we are able to convert these deals…our largest clients are growing much faster than the company average.”
Deal wins increased by 44% on a last twelve months basis, supported by broad-based momentum across verticals and geographies, he said.
The Pune-headquartered company recorded strong net new bookings at $809 million in the past quarter, higher both sequentially ($798 million) and from a year ago ($534 million).
Operating margin improved to 11.1% from 10.5% in the previous quarter and 8.5% in the June quarter of last year, helped by optimisation from its margin improvement programme, Project Fortius, and reduced offshore employee base.
“This marks our seventh consecutive quarter of margin expansion,” said chief financial officer Rohit Anand.
Headcount at 148,517 as of end-June reduced by 214 from the previous quarter but increased by 897 from a year earlier.
Along industry lines, employee attrition rate for the quarter came in higher at 12.6% from 11.8% in March quarter and from 10.1% in Q1FY25.
“Hiring will really be dependent on how we see the overall demand picture lay out for the rest of the year,” Joshi added.
