Tech Mahindra’s profits cut staffing, R&D costs | Tech US News


Profits declined in the three months ended September 30. 1,285.4 crore from 1,340.9 crore in the previous year. Revenue rose 21 percent to Rs. 13,129.5 crore from 10,881.3 crore during the period. Dollar revenue rose 11 percent to $1.63 billion from $1.47 billion. The software services firm reported an attrition rate of 20% in the quarter, which was significantly lower than its peers in the Indian IT sector which suffers from an attrition rate of 21-25%.

A 27 percent rise in expenses in the quarter impacted Tech Mahindra’s net profit. This led to an 11% decline in EBITDA (earnings before interest and tax). 1,468 crore Abbott margin, too, fell 3.8 percentage points to 11.4 percent in the quarter.

CP Gurnani, managing director and chief executive, Tech Mahindra, said in a post-earnings conference call that there are signs of a slowdown in the global market. For example, major appliance vendors in Europe have seen net sales decline over the past two months due to lower consumer spending. Such factors will affect some deals in the coming quarters, but for now, the deal pipeline is strong,” he said.

Tech Mahindra signed net new deals worth $716 million in the quarter, down from $750 million a year ago.

The company added four new clients in the $10 million-plus category and three new clients in the $20 million-plus category, but failed to sign a deal worth more than $50 million during the September quarter.

North America accounted for the largest share of total revenue at 50.8%, followed by Europe at 24.5%, and the rest of the world at 24.7%.

In an interview, Gurnani said that while India contributes about 5% of revenue, local demand from the advent of 5G services, digital transformation and government projects are currently strong.

Tech Mahindra has stepped up its advanced technology project offerings, he said, and expects projects like the Enterprise Metaverse deployment to contribute significantly to its order book going forward.

The core ‘technology’ vertical was Mahindra’s fastest-growing segment – growing 25.5% year-on-year in the September quarter to 10% of its total revenue, up from 9% last year. is more than

Explaining the higher employee expenses in the quarter, Chief Financial Officer, Rohit Anand said this was due to a large volume of new hires, “along with strategic investments in R&D initiatives.”

“We expect this move to generate strong cash flow in the coming quarters. It was a conscious, strategic decision,” he said.

Revenue by industry among verticals, communications, media and entertainment (CME) with a 40% contribution, followed by manufacturing (16%) and technology (10%).

Shares of Tech Mahindra closed up 0.77 percent. 1,071.65 on BSE on Tuesday. The stock is down 37 percent since January.

Analysts pointed to a neutral picture based on Tech Mahindra’s quarterly earnings.

Omkar Tanksale, senior research analyst at Axis Securities, said the company’s performance was more or less in line with market expectations.

“We had expected sequential revenue growth of 3.6%, as compared to Tech Mahindra’s growth rate of 3.3%. The quarterly performance is largely in line with expectations, with the company poised positively over the long term.” looks, but he may face a neutral run in the near future,” said Tanksley.

Despite a neutral outlook, Tech Mahindra announces profit 18 per share can be seen as a move to transfer excess cash flow to its shareholders – typical for an IT sector firm, experts said. “It’s important to look at whether the company is offering growth, which the firm is currently doing,” Tonksley added.

The data shows how macroeconomic cross-industry headwinds have started factoring in, added Akshara Bassi, research analyst, global cloud and servers market at Counterpoint India. Companies are gradually becoming more cautious, so we may see some quiet circles moving forward.”

Bassey also said that Tech Mahindra’s higher employee costs, along with lower-than-average hiring during the quarter, could mean the company’s hiring volume could be lower in the coming quarter.

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