Net Profit Slips 16 Per Cent To Rs 1,132 Crore As Margins Contract

Indian software services firm Tech Mahindra on Monday logged a 16.4 per cent slide in net profit at Rs 1,132 crore in the June quarter (Q1), the PTI reported. According to the report, Tech Mahindra’s profit margins narrowed due to several factors.

The Mahindra group company, which is the fifth-largest IT exporter in the country, had clocked a net profit of Rs 1,353 crore in the year-ago period. Its revenue grew 24.6 per cent to Rs 12,708 crore in the reporting quarter, as against Rs 10,198 crore in the year-ago period.

The operating profit sank 9.2 per cent to Rs 1,403.4 crore, and the operating profit margin narrowed to 11 per cent from 15.2 per cent in the year-ago period.

C P Gurnani, its chief executive and managing director, said there is still a lot of work to be done, and specifically mentioned profitability. He said the company will work on all the available levers to improve profitability, and is determined to deliver higher numbers on this critical aspect in the quarters ahead.

During the reporting quarter, its margins dropped due to investments it has done from a futuristic perspective, and also due to supply side concerns which typically stem from employee-related aspects like higher hiring or sub-contracting, he said.

Chief financial officer Rohit Anand said the company will work on improving the utilisation and increase the offshoring mix to get a greater quantum of project work to be done from low-cost geographies like India to attain its aspiration of exiting the fiscal 2022-23 with an operating profit margin of 14 per cent.

The company added 6,862 employees during the quarter to take its total headcount to 1.58 lakh.

Revenues have grown across all segments for the company, barring the banking, financial services and insurance segment, which showed a nearly 3 per cent decline on a sequential basis.

Gurnani said the company has analysed all the macroeconomic scenarios and their likely impact on its business, and is confident of delivering stronger performance going ahead.

Shares of Tech Mahindra’s shed 1.15 per cent to close at Rs 1,016.55 a piece on the BSE on Monday.