 "Tech Mahindra Q3 results: Net profit declines by 60.6% to Rs 510 cr")
Tech Mahindra, the IT services business of the Mahindra & Mahindra group, on Wednesday reported a 60.6 per cent decline in net profit to Rs 510.4 crore for the third quarter of FY24.
The revenues for Q3FY24 stood at Rs 13,101 crore, down 4.6 per cent year-on-year (Y-o-Y). Sequentially, the revenues were up 1.8 per cent and profit was up 3.2 per cent.
The company’s performance was impacted due the macro uncertainty and weakness in top verticals like telecommunications, BFSI and retail.
The company’s third quarter revenue numbers beat Bloomberg estimates, but missed profit expectations.
Bloomberg had estimated revenue to be at Rs 12,801 crore and net profit at Rs 663 crore.
When asked when green shoots would emerge, Mohit Joshi, chief executive officer (CEO) and managing director (MD), Tech Mahindra said: “The consensus seems to be that the second half of the calendar year is when people will start to see recovery. I don't think the recovery will be simultaneous across geographies and sectors,” said Joshi.
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He added that sectors like BFSI and retail will take six to nine months to recover.
The company’s third quarter performance was impacted as its large verticals like telecommunications and BFSI were down.
Communications, media and entertainment verticals were also down 13.4 per cent Y-o-Y and 0.3 per cent quarter-on-quarter (Q-o-Q).
BFSI was down 7.8 per cent Y-o-Y, and down 2 per cent sequentially.
Similarly, retail, transport and logistics were also down 4.2 per cent Y-o-Y and so was technology (-3.3 per cent).
Similarly, its major market US was down 1.6 per cent Y-o-Y and Europe was down by 8.3 per cent.
The company’s Ebitda came in at Rs 1,146 crore, up by 6.9 per cent Q-o-Q and down by 46.5 per cent Y-o-Y.
What was also concerning was that the firm's total contract value (TCV) was also under pressure.
Net new deal wins for Q3 came in at $381 million, down 40.4 per cent sequentially. TCV for Q2FY24 stood at $640 million, and for Q3FY23 was at $795 million.
This is the first quarter when Joshi takes over as the CEO. He has also announced top level hiring from industry and reorganisation.
Joshi said the company has embarked on a turnaround phase. “The overarching goal we have is to make investments and changes to maximise our long-term growth. To drive a culture of performance in both delivery and in sales,” Joshi explained.
The reorganisation under Joshi has three tracks — sales improvement, margin improvement and reorganising internal culture.
Joshi has reduced the number of sales SBU’s from 12 to six. The portfolio companies have also been integrated under the respective business units for better realisation of the synergies.
“When we looked at our account, we found that there was low investment focus on our top accounts. We are bringing more attention and investment to large accounts and at the same time engaging and revamping our engagement with smaller accounts,” said Joshi.
Like its peers, Tech Mahindra also saw its headcount fall.
The total headcount was down 4,354 with a total employee base of 146,250.
The attrition for Q3 stood at 10 per cent, the lowest in the sector. The company said that going forward, it will be embarking on recruiting fresh talent from campuses.