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.
AdvertisementIndia’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.”
Operating margins of the IT company have contracted by 280 basis points to 12% in the December quarter while expanding by 60 basis sequentially.
|Particulars||Q3 FY23||Q2 FY23||Q3 FY22|
|Revenue||₹13,735 crore||₹13,129 crore||₹11,450 crore|
|Net profit||₹1,297 crore||₹1,285 crore||₹1,368 crore|
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.
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|
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|
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