Tech Mahindra Q2 profit beats estimates at Rs 1,064 crore; revenue at Rs 8,630 crore

Analysts polled by Reuters, on average, expected revenue of Rs 8,605.8 crore and profit of Rs 1,003.7 crore.

"As expected, Telecom (about 42 percent of sales in Q2FY19) saw growth revival and grew 4.3 percent quarter-on-quarter in USD terms in Q2YF19. However, higher than expected de-growth in enterprise business (about 58% of sales; down about 4 percent quarter-on-quarter in USD terms) led to lower than expected growth in overall revenues," said analysts at Emkay Global Financial Services Ltd in a note.

He also said Tech Mahindra signed deals worth over $550 million this quarter, its highest ever.

The consolidated EBIT margin rose to 15.3 percent a rise of over 2 percentage points from 13 percent quarter on quarter.

"The company is focused on how we accelerate digital growth," Manoj Bhat, Chief Financial Officer, Tech Mahindra, told Moneycontrol.

The margin had an 80 basis point impact from rupee depreciation against the US dollar.

“Our strong deal wins especially in the Communication vertical coupled with our 10% plus sequential growth in digital revenues are a validation of our Run, Change and Grow strategy. Barring declines in our implementation business in our healthcare vertical, we have clocked a good quarter in terms of both revenue growth and EB/DTA margin improvement," said Gurnani in a statement to exchanges.

Chief executive CP Gurnani said in some way healthcare business weakness was expected because some projects were coming to a closure.

Bhat said the communications vertical saw deal wins worth $330 million, a new high in the vertical.

The company reported an attrition rate of 20 percent, a rise from 19 percent during the previous quarter. Bhat attributed the rise to independent phenomena and usual increase in attrition post wage hikes.

Tech Mahindra also said that it added 4 clients during the quarter, ending the reported period with an active client count of 930.