Tech Mahindra Q3 net profit slips 5% YoY to Rs 1,146 crore, revenue up 8%

In constant currency terms, revenue grew 4.3 per cent. In US dollar terms, revenue rose 5.1 per cent to $ 1,353 million.

Tech Mahindra on Friday posted around 5 per cent year-on-year (YoY) decline in its consolidated net profit at Rs 1,145.9 crore for the quarter ended December 31, 2019. The company had logged profit of Rs 1,202.9 crore in the year-ago quarter. Sequentially, the numbers grew 2 per cent.

Revenue from operations stood at Rs 9,654.6 crore, up 8 per cent against Rs 8,943.7 crore in the corresponding quarter of the previous fiscal.

In constant currency terms, revenue grew 4.3 per cent. In US dollar terms, revenue rose 5.1 per cent to $ 1,353 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) stood Rs 1,563 crore, up 4.2 per cent QoQ while margins slipped by 30bps QoQ to 16.2 per cent.

The numbers were largely better than Street expectations. For instance, Emkay Global Financial Services had built in a 3.1 per cent QoQ CC revenue growth. Net sales (revenue) in rupee terms was expected to increase 6.3 per cent YoY to Rs 9,508.5 crore and 4.8 per cent QoQ. EBITDA was seen declining 5.4 per cent YoY to Rs 1,630.4 crore. However, on QoQ basis, the numbers were projected to rise 8.6 per cent. Net profit or profit after tax (PAT) was forecast to slip 12.4 per cent YoY and 6.3 per cent QoQ to Rs 1,053.4 crore due to lower other income.

“This is a quarter of strong growth across our Communications and Enterprise businesses. We continue to win marquee deals and are well poised to capitalise on new market opportunities with technology shifts like 56, which continues to be a key focus area in the year ahead," said CP Gurnani, Managing Director & Chief Executive Officer.

Basic earnings per share (EPS) of the company stood at Rs 13.13 against Rs 13.55 in the year-ago period.

Total headcount during the quarter stood at 1,30,839, down 683 QoQ.

The company also announced the acquisition of a 70 per cent stake in Bangalore headquartered Cerium Systems. Cerium will boost the company’s Engineering Services practice in VLSi (Very Large Scale Integration) and Embedded Software, Tech Mahindra said in its press release.

“We continue to invest in niche digital assets complementing our service offerings. Cerium provides cutting edge solutions with a strong foothold in global semiconductor industry," said Vivek Agarwal, Head of Corporate Development and Portfolio Companies at the company.