Tech Mahindra

Witnessing demand revival across multiple segments

Oct 24, 2020 12:10 IST capital market

Tech Mahindra for the quarter ended Sep 2020 reported a revenue (in US dollar terms) of USD 1265.4 million, a fall of 5%QoQ and -2%YoY. But on constant currency terms the revenue grew by 2.9%QoQ. While communications revenue (in USD terms) grew by 3.2%QoQ (down by 5.8%YoY), the Enterprise revenue was up by 5.9%QoQ (up 1.2%YoY). On Rupee terms, the revenue at Rs 9371.80 crore was up by 3%QoQ and 3%YoY.

As OPM expand by 390 bps to 18.2%, the operating profit jumped up by 31%QoQ to Rs 1703 crore. However, hit by 72% fall in other income to Rs 117.50 crore, the growth at PBIDT moderated to stand at 6% to Rs 1820 crore. The PBT was up by 10%QoQ to Rs 1408.90 crore after accounting for lower interest and lower depreciation. The share of profit from associate jumped to Rs 0.40 crore from Rs 0.10 crore in sequential previous quarter. Thus the PBT before EO was up by 10% to Rs 1409.30 crore. The EO expense was nil for the quarter as well as corresponding previous period. With taxation stay higher by 6% to Rs 346.20 crore, the PAT was up by 11% to Rs 1063.10 crore. Eventually the net profit (After MI) was up by 9% to Rs 1064.60 crore with MI stand lower by 91% to a loss of Rs 1.50 crore.

Quarterly result YoY comparison

Revenue for the quarter ended Sep 2020 was up by 3%YoY to Rs 9371.80 crore. On yoy comparison the OPM expanded by 170 bps to 18.2% (from 16.5%) and thus the operating profit was up by sharp 13% to Rs 1703 crore. Expansion in OPM was largely due to lower employee cost as well as sub conracting expenses that have declined by 40 bps and 210 bps respectively. The other expenses was up by 80 bps to 17.3%.

After accounting for higher OI (up 71% to Rs 285.20 crore), higher interest and higher depreciation, the PBT (before share of profit from associate) was down by 5% to Rs 1408.90 crore. The share of profit from associate was Rs 0.40 crore (up 33%) and thus the PBT (after share of profit from associate) was up by 5% to Rs 1409.30 crore. And thus the PBT was down by 5% to Rs 1409.30 crore. After accounting for higher taxation (53% to Rs 346.20 crore), the PAT was down by 4% to Rs 1063.10 crore. With MI being share of loss of RS 1.50 crore a correction was down by 88%. The net profit was down by 5% to Rs 1064.60 crore.

Half yearly performance

Revenue for the period was up by 4% to Rs 18478.10 crore and with OPM expand by 40 bps to 16.3%, the operating profit was up by 7% to Rs 3003.50 crore. After accounting for lower OI, higher interest and depreciation, the PBT (before share of profit from associate) was up by 3% to Rs 2692 crore.

The share of loss from associate was Rs 0.50 crore (a swing of Rs 8 crore from loss of Rs 7.50 crore) and thus the PBT (after share of profit from associate) was up by 3% to Rs 2692.50 crore. The EO Expense was nil for the period as well as corresponding previous period. After accounting for higher taxation (up 21% to Rs 673.80 crore), the PAT was down 2% to Rs 2018.70 crore. With MI being share of loss of RS 18.20 crore, a fall of 21%, the net profit (after MI) was down by 2% to Rs 2036.90 crore.

Other developments

Total headcount at 124,258, up 842 numbers QoQ

Active Clients stood at 988 in Q221, up by 7 clients QoQ

Cash and Cash Equivalent at USD 1,564 mn as of Sep 30, 2020

The Board has proposed a special dividend of ₹ 15/- per share (300%)

Management Comment

CP Gurnani, Managing Director & Chief Executive Officer, Tech Mahindra, said, Our Repair, Rally and Rise strategy has helped the company to emerge stronger, as we journey towards a post Covid world. We are witnessing demand revival across multiple segments, as customers have accelerated their pace of digital transformation. Our focus on creating Human Centered Experiences will enable us to capture increased spends on consumerization, as businesses try to stay relevant in the current environment.

Manoj Bhat, Chief Financial Officer, Tech Mahindra, said, Strong execution on both revenue growth and operational metrics has helped to improve our performance on all fronts. Our cash conversion continues to be robust and we remain committed towards creating value for our shareholders through effective capital return.

Tech Mahindra: Consolidated Financial Results

 

2009 (3) 1912 (3) Var. (%) 1909 (3) Var. (%) 2009 (6) 1909 (6) Var. (%) 2003 (12) 1903 (12) Var. (%)
Sales 9371.80 9106.30 3 9069.90 3 18478.10 17722.90 4 36867.70 34742.10 6
OPM (%) 18.2 14.3 16.5 16.3 15.9 15.5 18.2
OP 1703.00 1300.50 31 1500.90 13 3003.50 2815.00 7 5726.10 6336.90 -10
Other inc. 117.50 416.10 -72 216.30 -46 533.60 557.60 -4 1192.40 534.20 123
PBIDT 1820.50 1716.60 6 1717.20 6 3537.10 3372.60 5 6918.50 6871.10 1
Interest 39.90 50.30 -21 38.30 4 90.20 83.70 8 191.90 133.20 44
PBDT 1780.60 1666.30 7 1678.90 6 3446.90 3288.90 5 6726.60 6737.90 0
Dep. 371.70 383.20 -3 341.50 9 754.90 662.80 14 1445.80 1129.20 28
PBT before Share of profit from Associates 1408.90 1283.10 10 1337.40 5 2692.00 2626.10 3 5280.80 5608.70 -6
Share of Profit fro Associates 0.40 0.10 300 0.30 33 0.50 -7.50 LP -5.50 -65.50 -92
PBT 1409.30 1283.20 10 1337.70 5 2692.50 2618.60 3 5275.30 5543.20 -5
EO Exp 0.00 0.00 0.00 0.00 0.00 217.50 0.00
PBT after EO 1409.30 1283.20 10 1337.70 5 2692.50 2618.60 3 5057.80 5543.20 -9
Tax 346.20 327.60 6 226.50 53 673.80 558.30 21 1160.40 1254.40 -7
PAT 1063.10 955.60 11 1111.20 -4 2018.70 2060.30 -2 3897.40 4288.80 -9
MI -1.50 -16.70 -91 -12.70 -88 -18.20 -22.90 -21 -135.60 -8.80 1441
Net Profit 1064.60 972.30 9 1123.90 -5 2036.90 2083.20 -2 4033.00 4297.60 -6
EPS (Rs)* 48.8 44.6 51.5 46.7 47.8 48.1 49.3
* On Current Paid up equity capital of Rs 436.2 crore, Face value Rs 5.
Figures in crore
Source: Capitaline Databases
EO: Extraordinary items
EPS is adjusted after EO and relevant tax

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