Tech Mahindra Q3 results: Profit tanks 61% to Rs 510 crore; key takeaways

Tech Mahindra Ltd (TechM) on Wednesday reported a 60.6 per cent year-on-year (YoY) drop in net profit at Rs 510 crore for the December quarter. Analysts were expecting profit for the IT firm to fall 45-52 per cent. Revenue for the quarter fell 4.6 per cent YoY to Rs 13,101 crore, the IT major said in a BSE filing. This was against 5-7 per cent drop in sales that analysts estimated ahead of TechM results.

Revenue in dollar terms came in at $1,573 million, up 1.1 per cent sequentially (down 5.7 per cent) YoY. In the constant currency terms,. revenue was up 1.1 per cent QoQ but down 5.4 per cent YoY.

Ebit margin for the quarter stood t 5,4 per cent. The IT firm said it recorded net new deal wins of Rs 381 crore for the quarter. Analysts were expecting the IT firm to report deal total contract value (TCV) of $400-500 million.

Net new deal wins stood at $640 million in the September quarter and $795 million in the year-ago quarter. Tech Mahindra said it had 1,228 active clients at the end of December quarter, which was lower than 1,252 clients in September and 1,290 clients in the same quarter last year.

IT attrition came in at 10 per cent against 11 per cent in September and 17 per cent in the year-ago quarter. Utilisation rate stood at 88 per cent, higher than 86 per cent each in September and the year-ago quarter. Total headcount fell 2.9 per cent to 1,46,250 sequentially and 6.9 per cent YoY. Software professions at 81,705 were up 0.6 per cent over the September quarter's 81,200.

Managing Director & Chief Executive Officer Mohit Joshi said: "The quarter was a mixed outcome, with growth in the Manufacturing and Healthcare segments but muted spending in areas like Communications, BFSI, and Hi-tech. While this dichotomy in the markets will take its own time to settle, we are focusing internally on realigning under the new structure and strengthening the foundations of our organisation."

Chief Financial Officer Rohit Anand said the year has given his IT firm the opportunity to step back and review its portfolio. "We are confident that these actions will help us correct our course and deliver value in the long term. We are encouraged by the robust cash conversions this year, and we hope to continue this rigor in other operational areas as well." he said.

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