Tech Mahindra net up 28% on new deals

Last Updated: Tue, Nov 06, 2012 04:02 hrs

Beats estimates; revenue for the quarter grows 22% to Rs 1,631 crore

Acquisitions and new deal wins helped Tech Mahindra report a net profit (excluding the share of Mahindra Satyam) of Rs 178 crore for the second quarter ended September 30, up 28 per cent from Rs 139.4 crore in the corresponding quarter last financial year.

However, volatility in foreign currency led to a forex loss of $13 million during the quarter, impacting its sequential net profit growth numbers. Tech Mahindra's net profit (excluding Mahindra Satyam's) was down 5.5 per cent on a sequential basis and down 12.4 per cent, including the share of profits from associates. Net profit, including Mahindra Satyam's, was down 12.4 per cent at Rs 296.3 crore from Rs 338.5 crore.

Revenue for the quarter grew 22 per cent to touch Rs 1,631 crore, from Rs 1,333 crore on a year-on-year basis. Revenue rose 5.7 per cent on quarter-on-quarter basis. Of this, $13.3 million came due to the acquisition of Hutchison Global Services.

Revenue from non-BT business grew 4.2 per cent during the quarter, whereas BT business continued to fall and was down 3.6 per cent.

"BT overall has been wanting to bring down its IT spends. Within that we have managed to grow our share. Almost 65 per cent of BT's IT work is managed by Tech Mahindra, whereas 30-33 per cent is with global vendors. With BT revenues of $400-350 million it's the single largest account for us and biggest when compared to others," said Vineet Nayyar, executive vice-chairman, Tech Mahindra.

In terms of macro-environment trend, he said that Europe continues to be under pressure, but the company sees good pipeline in the US, and BRIC regions.

During the quarter, the company won two large accounts in Europe. "Our key wins showcase the confidence our customers are reposing in us. Our non-organic growth journey has started well with two key additions to our portfolio. We continue with our focus on development of new platforms with our NMACS strategy as a key differentiator," said C P Gurnani, managing director.

Ebitda during the quarter was 20.3 per cent down 70 basis points. "We had wage hikes that impacted our margins by 150 basis points and acquisitions had a negative impact of 30 basis points. But we managed to curtail the impact by focusing on cost optimisation efforts, better mix in business and moving away from low margin business," said Sonjoy Anand, CFO. The company announced wage hike of six per cent offshore (India) and two per cent onsite.

During the quarter the company's headcount stood at 50,479. Of this software professional headcount was at 24,222, BPO was at 25,003 and support staff at 1,252. The BPO headcount was up due to the Hutchison acquisition which added 12,011 employees.

Debt for the quarter was Rs 1,286 crore, compared to Rs 886 crore in Q1.

Tech Mahindra's stock price was up 1.26 per cent at Rs 963.45 per share during intra-day. However, the stock closed at Rs 955 per share.

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