Tech Mahindra Q3 Profit Plummet

25 Jan 2024 , 11:31 AM

Tech Mahindra released a dismal set of quarterly results on Wednesday. The company’s consolidated net profit fell 61% YoY to Rs 510 crore, falling short of an ETNow polled amount of Rs 590 crore.

Although it was less than expected at Rs 12,790 crore, consolidated revenue from operations decreased by over 5% YoY to Rs 13,101 crore.

The top line increased 1.8% while the bottom line increased 3.2% sequentially.

The revenue decreased by 5.4% YoY but increased 1.1% sequentially in constant currency terms.

The IT giant closed new contracts for $381 million in the most recent quarter, a substantial decrease from $640 million and $795 million in the same period last year.

The largest revenue-generating vertical for Tech Mahindra, communications and media, had a steep YoY reduction in revenue of 13.4%, while sequential revenue decreased by 0.3%.

The company’s other two weak verticals were banking and financial services and technology. Revenue in technology declined 3% YoY and QoQ, while BFSI reported a severe 8% YoY decline.

The results of the quarter were inconsistent, showing increase in the manufacturing and healthcare sectors but low spending in the BFSI, hi-tech, and communications sectors. Tech Mahindra’s Managing Director and CEO, Mohit Joshi, stated, ‘We are focusing internally on realigning under the new structure and strengthening the foundations of our organization, even though this market dichotomy will take its own time to settle.’

Geographically speaking, the Americas witnessed a 1.6% YoY loss, Europe saw an 8.3% decline, and the rest of the globe saw an 11.2% decline.

Earnings before interest and taxes, or EBIT, increased to 5.4% after a sequential improvement of 70 basis points.

Declining attrition rates were a bright spot for Tech Mahindra as well, similar to peers. In the most recent quarter, the 12-month attrition rate was 10%, down from 11% in the September quarter.

As of December 31, there were 146,250 total employees, a decrease of 4,354 over the previous year.

‘We’ve had the chance to take a step back and evaluate our portfolio this year. CFO Rohit Anand stated, ‘We are sure that these steps will enable us to change direction and provide value over the long run.

As of December 31, there was a total of Rs 7,012 crore in cash and cash equivalents, up from Rs 6,515 crore in the previous quarter.

Tech Mahindra’s shares closed 3% higher at Rs 1,407.95 on the National Stock Exchange ahead of the company’s earnings.

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