Tech Mahindra’s Q3 net profit slips 5.2% on year to ₹1,297 crore

Advertisement
Tech Mahindra’s Q3 net profit slips 5.2% on year to ₹1,297 crore
  • In rupee terms, revenue for the IT company grew 19.9% on year to ₹13,735 crore while sequentially it grew 4.6%.
  • Tech Mahindra attributes the slowdown in growth to the challenging macro environment and looks to identify new demand drivers.
  • Tech Mahindra’s attrition rate is the lowest among top IT firms including TCS, Infosys and Wipro.
  • Its employee benefits expenses have increased nearly 25% on year and 2.3% sequentially to ₹7,055 crore.
Advertisement
India’s sixth-largest IT services company Tech Mahindra reported a 5.2% decline in consolidated net profit to ₹1,297 crore in December quarter, against ₹1,368 crore in the same quarter last year, as a tough macroeconomic environment took its toll. Sequentially, its net profit grew 0.9%.

In rupee terms, revenue for the IT company grew 19.9% on year to ₹13,735 crore while sequentially it grew 4.6%. On a constant currency (CC) basis, revenue grew by 0.2% sequentially.

Tech Mahindra attributes the slowdown in growth to the challenging macro environment and looks to identify new demand drivers.

“We are witnessing moderation in growth given the tough macro economic environment. We wiIl continue to work with our customers to pre-empt their technological requirements and identify new demand drivers, especially for digital services,” said CP Gurnani, MD and CEO of Tech Mahindra.

Further, Gurnani, in a press conference said, “Considering that there was a soft macro environment and geopolitical winds are not settled, it is traditionally a slow or furlough quarter, I think I am very happy with Tech Mahindra’s Q3 performance. I can only attribute it to our focused investment in customer experience management, customer centricity and more important is your investment in 5G and overall communications, media and entertainment (CME) continuing to pivot growth.”
Particulars Q3 FY23Q2 FY23Q3 FY22
Revenue ₹13,735 crore ₹13,129 crore₹11,450 crore
Net profit ₹1,297 crore ₹1,285 crore₹1,368 crore
EBIT Margin 12%11.4%14.8%
Operating margins of the IT company have contracted by 280 basis points to 12% in the December quarter while expanding by 60 basis sequentially.
Advertisement


To this, Rohit Anand, the chief financial officer at Tech Mahindra said they were working on improving the margins by maintaining their client strategy.

“Our numbers reflect resilience as we continue to work on the expansion of operating margin. I am confident that our strategy of client-centricity and agility combined with delivery-led transformation willI help us create value for our customers and stakeholders alike,” he added.

Tech Mahindra continues to have lowest attrition rates among peers

On the bright side, the attrition rate for Tech Mahindra continues to improve consistently. In the December quarter, the company reported an attrition rate of 17% compared with 20% in the previous quarter and 24% in Q3 FY22.

Tech Mahindra’s attrition rate is the lowest among the top tier IT firms, including TCS, Infosys and Wipro.
Advertisement

However, the company’s total headcount has fallen by 4.2% sequentially to 1.57 lakh.
Top 5 IT companies Attrition rate in Q3 FY23
TCS21.3%
Infosys 24.3%
HCL Technologies21.7%
Wipro21.2%
Tech Mahindra17%

Following the improvement in the company’s attrition rate, its employee benefits expenses have increased nearly 25% on year and 2.3% sequentially to ₹7,055 crore.

Employee benefit expenses Amount
Q3 FY23₹7,055 crore
Q2 FY23₹6,895 crore
Q3 FY22₹5,660 crore

SEE ALSO: Adani Group stocks witness high volatility amidst war of words between the company and Hindenburg Research
Auto parts sourcing startup CapGrid raises $7 million from Nexus Venture, others
{{}}