TechM Q1 Net Profit Jumps 36%, Expects Steady Growth
Mumbai: Tech Mahindra’s first quarter profit beat market expectations amid a tough environment helped by deferment in wage hikes and higher forex gains as the Mumbai-based IT firm aims at turning around its weak performance last year.
Tech Mahindra’s margins, which are among the lowest in the industry, stood at12.7% in the quarter, up 70 ba- sis points from the sequential quarter. The company said it has hit a “nadir” and now expects business to slowly, but steadily improve. “We have opened the quarter on a positive note. It is a decent beginning and lot more has to be done. Margins have hit the bottom. We promise slow, but definitive growth,” said chief executive officer CP Gurnani on Monday.
The company reported a profit of .₹ 798.6 crore for the quarter ended June, up 35.8% from profit of .₹ 588 crore in the sequential quarter. Revenue, however, fell 2.1% to .₹ 7,336.1, crore hurt by appreciation in rupee. Analysts were expecting a profit of .₹ 609.3 crore on revenue of .₹ 7,268.2 crore, according a Bloomberg poll.
Indian IT firms are posting muted earnings growth hurt by wage hikes, stronger rupee and slower pace of large deal closures, amid uncertainty surrounding protectionist measures in the US. The companies are increa- singly relying on smaller digital deals to make up for the slowness in large deals in traditional outsourcing business as business models change with onset of automation.
“There are benefits of resizing the pyramid and head to tail ratio. Business is changing in requirement. We need people who are multi talented. We have to utilise the right experience people in the right role which might mean certain adjustments,” said deputy CFO Manoj Bhat.
CP GURNANI CEO, TechM