 "Tech Mahindra")
A sudden pause in work from the telecom sector and new-age firms has impacted Tech Mahindra’s first-quarter FY24 results.
The company’s net profit, at Rs 692.5 crore, was down 38.8 per cent year-on-year.
Revenue grew 3.5 per cent at Rs 13,159 crore. In dollar terms the firm’s revenue was down 4.2 per cent sequentially.
This is the weakest performance when compared to peers.
Quarter-on-quarter net profit was down 38 per cent, and revenue slipped 4.1 per cent.
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Tech Mahindra’s revenue growth and net profit were a miss, according to Bloomberg estimates, which had estimated revenue at Rs 13,579 crore and net profit at Rs 1,146 crore.
The worst parameter for the company for Q1FY24 was margins. Tech Mahindra reported EBIT (earnings before interest and tax) margins at 6.8 per cent from last quarter’s 11 per cent.
C P Gurnani, managing director and chief executive officer, said Q1FY24 had not been the best of the quarters for the company. Rather, it was one of the toughest he had seen in the past five years.
While explaining the reasons for this, Gurnani said: “The communications sector hit the brakes suddenly during the quarter and our cost could not be aligned to the sudden change. We also had two-three projects that were impacted due to a funding winter --- these were start-ups in the late stage. But our fundamental offers and client base are strong and we will be in a better position next quarter.”
Sequentially, communications, media and entertainment (CME) is down 9.4 per cent. Gurnani said with over 40 per cent of the company’s revenue coming from CME, the firm would focus on increasing its non-CME business.
In terms of sectors that pulled the firm’s performance, they include CME (-9.4 per cent); banking, financial services, and insurance (-3.2 per cent); and retail transport and logistics (-0.3 per cent).
Meanwhile, manufacturing grew a mere 1.8 per cent and technology was flat.
In terms of geographies, all the segments were down. Sequentially, the US was down 0.5 per cent, Europe 6.7 per cent, and the rest of the world 8.2 per cent.
Deal wins, or the total contract value (TCV) for the quarter, came in at $359 million, down 39 per cent sequentially.
Year-on-year the TCV was down from $802 million.
Attrition came down to 13 per cent in Q1FY24 from 15 per cent in the preceding quarter, and there was a net decline in the employee base. The net decline for the quarter was 4,103.
