Tech Mahindra Q2 profit rises 5.6% to Rs 1,124 crore; to acquire Born Group

IT firm Tech Mahindra on Tuesday posted 5.6 per cent increase in consolidated net profit at Rs 1,124 crore for the September quarter, and said it will acquire US-based Born Group at an enterprise value of USD 95 million (approximately Rs 671 crore).

The Mumbai-based company had registered a net profit of Rs 1,064.3 crore in the July-September 2018 quarter, Tech Mahindra said in a statement.

Its revenue from operations grew 5.1 per cent to Rs 9,070 crore in the quarter under review from Rs 8,629.8 crore in the year-ago period, it added.

In dollar terms, the company's profit was at USD 158.6 million, while revenue was USD 1.28 billion in the September 2019 quarter.

"We are thankful to our customers for believing in our capabilities despite a tough demand environment. Our consistent large deal wine is a testimony of our differentiation in the marketplace," Tech Mahindra Managing Director and CEO CP Gurnani said.

He added that the company is confident of its growth outlook for both communications and enterprise businesses.

"Digital continues to be a strong growth driver as we help our customers in their transformation journey," he said.

Tech Mahindra Chief Financial Officer Manoj Bhat said the company have witnessed a broad-based growth across geographies and customers.

"We continue to focus on margin improvement, while transitioning some of the large deals in a volatile macro economic environment," he added.

During the quarter, the company signed a multi-year agreement with AT&T to expand strategic collaboration accelerating the latter's IT network transformation, shared services modernisation and movement to the cloud.

Tech Mahindra said its board has approved the proposal to acquire 100 per cent stake in Born Group Pte Ltd, directly and indirectly through its wholly owned subsidiary - Tech Mahindra (Singapore) Pte Ltd.

"The enterprise value is USD 95 million. USD 25 million will be paid out linked to achievement of financial targets for the financial year ending December 31, 2019," it said.

The cash transaction is expected to close by November 15, 2019.

Headquartered in New York City, Born Group is the largest independent, integrated agency for strategy, creative content and commerce offerings with strong technology capabilities. It has offices in London, Singapore, Hong Kong and India, and has over 1,100 employees.

"The acquisition will enhance Tech Mahindra's transformation consulting capabilities through addition of creative and design skills, technology and analytics platforms and commerce expertise," it said.

Tech Mahindra will acquire the Indian subsidiary of Born Group - Born Commerce Pvt Ltd. Tech Mahindra (Singapore) Pte Ltd will acquire all the other legal entities of Born Group, it added.

The entity was incorporated in 2014. Its turnover was USD 50 million in 2018.