TechM Q1 Net Profit Jumps 36%, Ex­pects Steady Growth

The Economic Times - - Companies: Pursuit Of Profit - Our Bu­reau

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

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